Target’s (TGT) earnings announcement was a big disappointment, with the retailer missing profit estimates and warning of a weak holiday quarter. Shares are down around 14% this morning, driving up the value of the protective put we purchased to hedge against a post-earnings sell-off.
I am recommending we book a profit on the put, thus lowering our cost basis on the position, to help offset the decline in shares. I also want to roll our short call down to generate more income.
Note: No action is needed on the TGT Jan 2024 Monthly (1/19/24) 150 Call at this time.
Current Stock Price: $154.42
Cost Basis: $46.95
- Buy to close the TGT Dec Monthly (12/16) 180 Call for around $0.51
- Sell to open the TGT Dec Monthly (12/16) 160 Call for around $4.22
- Set initial credit limit at $3.71, but adjust as needed to roll today
- Sell to close the TGT Nov Week Four (11/25) 155 Put for around $4, but adjust as needed to close today
New Cost Basis: $39.24