I just picked up some LEAPS on TGT. I'm also long stock. I guess becuase we have a pretty low beta the time/premium is low. I see a huge bargain. I bought Jan '01 (27.5) for 2 3/4. Those calls should be in the money by next week. If TGT hits 30 in the next 5 months it's an easy double....For those that wonder about a dabble in options this one seems like a great on to start with.
straddle or combination candidate. When a stock hits its year low (or high for that matter), its a pretty good bet that its not going to stay there for four months. If you buy an equal number of calls and puts with the same expiration date around the current trading price (ie. 27.5 Jan calls, 25 Jan puts, you can essentially buy insurance against guessing wrong. There is a risk that they will all expire worthless, but, if you're bullish on the stock, set a limit to sell your puts at the total purchase value of all your options plus your commission. That way you get your money back and still have your calls if the stock price declines dramatically. Options are risky, but they are not difficult to make money on if you have a strategy. Good luck!
I agree fully with your call on the straddle. It's nice to see someone on the boards who actually understands the concept. I've not bought the puts because I have faith, perhaps blind faith, that the price will recover. I would guess the price would have to drop to about 24 (48 pre-split) for the puts to pay off the premium. I just don't see them going there. If I had a larger exposure I'd problibly do it though.
you are incorrect. at expiration, the intrinsic value and total value of the option will be 2 1/2 causing you to lose 25 smackers per option. it better hit 30 well before january 2001 if yopu really want fair compensation for the risk you are taking.