I bought spreads on ROST.

music selection:  “Breakin’ Free” — Tesla

weigh-in:  217.8 (0.2)

Ross Stores (ROST) is a discount retailer that is holding up well against Wal-Mart and Amazon.  They are a Dividend Aristocrat with 25 consecutive years of distribution increases.  It is a slow  moving large cap (42B) making it an ideal candidate for in the  money bear put spreads.

The chart shows a period of consolidation with neither an uptrend or downtrend year to date.  With shares trading at 120.16, I bought the 130/135 strikes bear put spread (11 spreads) for 4.2964 per share at the 16APR2021 expiry.  I put 4,726 of capital at risk in the trade which will be in force for about 47 days.  I enjoy 8.19% downside protection before my maximum profit of 774 dollars is threatened.  That is good for 16.4% over 47 days or 127% annualized.

Devour your prey raptors!

Bear Put Spread Ross Stores (ROST) with yield up to 127%

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5 thoughts on “Bear Put Spread Ross Stores (ROST) with yield up to 127%

  • March 1, 2021 at 4:51 pm
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    That seems like a really good trade.

    Reply
  • March 2, 2021 at 10:09 am
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    They have an ER in about 36 hours from now…that’s probably why yield is so high.

    Reply
  • March 2, 2021 at 5:00 pm
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    My screen has this spread at a mid price of 4.80. I would be tempted to attempt an exit for a 12% gain in one day rather than risk the earnings report for the sake of the remaining 20 cents. But then again I’m a coward who lives vicariously through the raptor.

    Reply
    • March 2, 2021 at 5:24 pm
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      I see that too. The bid/ask spread is crazy though. The actual market price could be just about anything. I have downside protection that would require ROST to break substantially past the 1 year target and well past the 52 week high before profits are threatened. I think I’m going to hold. As earnings approaches if it is clear there is an easy win, I will probably sell half and let the rest ride.

      Reply

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