Bullish Option Trade on Michael Kors

aplus's picture

We've been watching Michael Kors (KORS) and it has recently dipped from over $83 to just over $80, not a large dip but it is setting up for a good entry point.  The company has been posting solid revenue numbers, annual growth and the product lineup is popular across different age groups.  The stock has already gained roughly 37% in the past 12 months, and right now there is an opportunity to put on an option trade with some safety built in to absorb a stock drop of roughly 14%.

This is a synthetic long strategy where we are buying 1 call, and selling 2 puts to finance the purchase of the call.

We are buying the Feb 2014 $82.50 Calls on KORS for $4.50, and selling 2x the Feb 2014 $70 Puts for $1.90, for a net cost of $0.70 cents.

If the stock pops in the short term we may take the calls off to protect those gains, and not get hit with the decay over time since there is a lot of time premium built into these options.  

Below are the highlighted options that we are trading.



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