Target Corporation (TGT), Wal-Mart Stores, Inc. (WMT): Retailer’s Rebound Could Make Traders 139% Profits

With Target Corporation (NYSE:TGT) trading near $63.80 at the time of this writing, an in-the-money $57.50 strike call option currently has $6.30 in real or intrinsic value. The remainder of the premium is the time value of the option. And this call option currently has a delta of about 77.

Rule Two: Buy more time until expiration than you may need — at least three to six months — for the trade to develop.

Time is an investor’s greatest asset when you have completely limited the exposure risks. Traders often do not buy enough time for the trade to achieve profitable results. Nothing is more frustrating than being right about a move only after the option has expired.

With these rules in mind, I would recommend the Target Corporation (NYSE:TGT) April 57.50 Calls at $7.75 or less.

A close below $60 in TGT on a weekly basis or the loss of half of the option’s premium would trigger an exit. If you do not use a stop, the maximum loss is still limited to the $775 or less paid per option contract. The upside, on the other hand, is unlimited. And the April options give the bull trend more than seven months to develop.

This trade breaks even at $65.25 ($57.50 strike plus $7.75 options premium). That is less than $1.50 above Target Corporation (NYSE:TGT)’s recent price. If shares hit the $76 target, then the call options would have $18.50 of intrinsic value and deliver a gain of almost 140%.

Recommended Trade Setup:

— Buy TGT April 57.50 Calls at $7.75 or less
— Set stop-loss at $3.87
— Set initial price target at $18.50 for a potential 139% gain in seven months

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