Option Trades To Be Thankful For

We hope this Thanksgiving holiday finds you in good company, good health and good spirits. And we’d like to give you a few more reasons to be thankful this year.

The holiday season is shaping up to be bountiful for a number of retailers and food companies (and not so plentiful for others). The best way to leverage the moves in these stocks will be with options. So here are eight option trading picks we know you’ll be thankful for.

Amazon.com (AMZN) Calls

Recommended by: John Jagerson and Wade Hansen, Options Coaches, Turbo Trader Live

Thanksgiving is nearly upon us, and for traders, that means we will start to see more Black Friday sales data from retailers as the fourth-quarter holiday season gets started. The latest round of earnings in the retail sector was surprisingly good, and we are targeting a company that should benefit from a rally in consumer spending with a significant competitive advantage to capture online shoppers.

Amazon.com, Inc. (NASDAQ: AMZN) recently bounced strongly off support and is heading toward our price target of $180 per share. If the news continues to be strong. We think the AMZN Dec 175 Calls are a good way to profit from the Black Friday rally. This call is out of the money and there is not much time before expiration, but we don’t expect that traders will need to hold the position for very long. Plus, this setup will keep the cost of entry low.

Tyson Foods (TSN) Calls

Recommended by: Sam Collins, Editor, Daily Trader’s Alert

The holidays mean lots of good food, and much of it will be provided by Tyson Foods, Inc. (NYSE: TSN) since it is one of the world’s largest suppliers of beef, chicken and pork products. An improving economic environment, rising demand for protein-related products, and rigid cost controls are expected, over time, to increase earnings and result in a higher stock price.

S&P rates TSN a “five-star strong buy” with a 12-month target of $21. Technically the stock is on support at its 200-day moving average and internal indicators are flashing buy signals. Buy TSN April 15 Calls.

Nordstrom’s (JWN) Calls

Recommended by: Chris Johnson and Jon Lewis, Editors, The Winning Edge

These days, shopping is almost as synonymous with the Thanksgiving holiday as turkey. The high-end retailers are enjoying good numbers in the pre-Thanksgiving shopping season as their shoppers remain strong in the struggling economy. Nordstrom, Inc. (NYSE: JWN) has been near the top of our bullish list of retailers for the past few weeks.

JWN shares pulled back after a positive earnings report last week, and are now on a tear and likely to hit the $46 level. Given this outlook, the JWN Jan 45 Calls, currently around $1.45, offer a great deal for options shoppers with the potential to double between now and the January expiration.

Sears Holdings Corp. (SHLD) Puts

Recommended by: Michael Shulman, Editor, Short-Side Trader

We’ve mentioned some Black Friday winners, but now I have a Black Friday loser for you: Sears Holdings Corporation (NASDAQ: SHLD). This dying retailer just reported a $218 million loss for the third quarter, which is almost double last year’s loss of $127 million, and overall revenues fell 5%. Domestic comparable-store sales decreased 0.7% at Kmart, which is owned b SHLD, and a huge 8.2% at Sears stores.

This holiday shopping season is not going to help the company. The lines will be in front of Nordstrom’s and Wal-Mart Stores Inc. (NYSE: WMT), not Sears and Kmart, which is owned by SHLD. Look at SHLD Jan 2012 45 Puts.

See: 5 Black Friday Stocks to Short

H.J. Heinz Co. (HNZ) Calls

Recommended by: Chris Johnson and Jon Lewis, Editors, The Winning Edge

OK, so ketchup may not be the most traditional of Thanksgiving condiments, but H.J. Heinz Company (NYSE: HNZ) also makes gravy, and more importantly, the stock is no turkey.

After a brief rejection at the $50 level, the stock is now retaking its 50-day moving average, which makes it an attractive technical play. Last quarter’s earnings results beat analyst expectations by 2 cents, putting the stock back into bull mode. We like the stock as a candidate to hit its 2008 highs of $52 in the near term.

Investors looking to leverage this move could consider the HNZ March 50 Calls, which are trading at a paltry $1 per contract. A move to the expected $52 over the next month or so would result in more than 150% profits.

Tiffany & Co. (TIF) Calls 

Recommended by: Sam Collins, Editor, Daily Trader’s Alert

Despite difficulties in the retail sector, Tiffany & Co. (NSE: TIF) has maintained a solid uptrend, and within the last week broke to new highs.

S&P expects an 11% sales advance in FY 2011 (January) and 2012 with a 12-month target of $65. Technically TIF has broken from a massive reverse head-and-shoulders bottom with a long-term target of $75-plus. Buy TIF Jan 55 Calls.

SIGA Technologies (SIGA) Puts

Recommended by: Michael Shulman, Editor, Short-Side Trader

The Thanksgiving tradition was a bright spot in a long and sordid history in which Native Americans and European settlers came together. One of the darker parts of that history was the smallpox epidemic that wiped out so much of the Indian population. Three hundred years later, smallpox is still a potential threat.

In October, the U.S. Department of Health and Human Services said it intended to give SIGA a $500 million contract to deliver 1.7 million doses of its smallpox treatment, with the potential for the deal to increase to $2.8 billion. But the company was ruled ineligible to receive the contract by the Small Business Administration after a competitor protested the award. SIGA said it plans to appeal the decision, but I don’t believe the company has a very bright future. Smallpox vaccine contracts have been let before — as recently as 2005 — but no one has figured out how to actually manufacture the vaccines in volume. Take a look at SIGA June 10 Puts, but be aware that this is a very high-risk play, and that the options are illiquid — only 21 contracts open.

Best Buy (BBY) Calls

Recommended by: John Jagerson and Wade Hansen, Options Coaches, Turbo Trader Live

As consumers start to take action this holiday, technology spending is forecasted to be particularly strong. That means Best Buy Co., Inc. (NYSE: BBY) is in a real sweet spot to take advantage of an extension of the current rally. BBY recently bounced off support and has clearance to run another 10% in the short term before running into resistance at $48 per share.

BBY is also uniquely positioned to take advantage of demand this season for the Apple Inc. (NASDAQ: AAPL) iPad. The retailer has a significant competitive advantage in the space and is already hinting at a positive holiday shopping season. We like the BBY Dec 45 Calls for a very short-term holiday trade. If the stock meets its upper price target of $48 in the short term, we would suggest covering your profits before the company reports earnings on Dec. 14.