This is a perfect time to trade a name we haven’t traded in a while: Tractor Supply (TSCO). The company is a rural and “ex-urban” purveyor of everything from flannel shirts to tractors. Recent earnings were terrific. Sales increased 35% year over year while earnings grew 61%. Why? The stores stayed open during the pandemic, giving the company an opportunity to gain market share, which they did in a manner similar to the success seen by Target (TGT).
I have wanted to trade this wonderful retail stock for a while but liquidity issues have prevented me from doing so. Next week’s option chains are fairly liquid. The spread between the Bid and the Ask is wide but manageable. Let’s sell a put on TSCO.
I also want to return to Corning (GLW). Corning too is a growth company benefitting from but not 100% beholding to the pandemic. The recent $200 million plus injection of capital from Uncle Sam to build a medical glass facility put GLW on analysts’ radar. The company is now seen by new eyes for what it really is … a world leader in glass technology for medical glass, fiber optic cable, catalytic converters, mobile tech and other devices.
Tractor Supply (TSCO)
Current Stock Price: $145.75
Action: Sell to open the TSCO August (8/21) 140 Put
Current Option Price: $1.15-$1.35
Recommended Limit: Set your initial limit order at $1.25 You can go as low as $1.00 but please don’t start there and always use limit orders.
Expiration: Friday, August 21st (10 days)
Potential Rate of Return: 0.9%, or 29.6% on an annualized basis if this put expires worthless
Corning (GLW)
Current Stock Price: $32.44
Action: Sell to open the GLW August Monthly (8/21) 32 Put
Current Option Price: $.41-$.46
Recommended Limit: Set your initial limit order at $0.43 You can go as low as $0.36 but please don’t start there and always use limit orders.
Expiration: Friday, August 21st (10 days)
Potential Rate of Return: 1.3%, or 45.6% on an annualized basis if this put expires worthless.