Put Options on HD on 2/11/2013

The Home Depot, Inc. (The Home Depot) is a home improvement retailer. The Company operates The Home Depot stores, which are full-service, warehouse-style stores. The Home Depot stores sell an assortment of building materials, home improvement and lawn and garden products and provide a number of services. The Home Depot stores average approximately 104,000 square feet of enclosed space, with approximately 24,000 additional square feet of outside garden area. The Home Depot stores serve three primary customer groups: do-it-yourself (D-I-Y) customers, do-it-for-me (D-I-F-M) customers and professional customers. As of January 29, 2012, it had 2,252 The Home Depot stores located throughout the United States including the Commonwealth of Puerto Rico and the territories of the United States, Virgin Islands and Guam, Canada, China and Mexico. In October 2012, U.S. Home Systems, Inc. became an indirect wholly owned subsidiary of The Home Depot. In February 2013, it acquired Measurecomp LLC.

Stockwinners is Bearish on this name for the following reasons: 

1. HD is hovering around its all time high and looks topped off
2. HD is trading at 25X earnings which is way above its 18X average
3. The overall market is due for a modest correction and HD is no exception
4. The risk/reward ratio for this trade is attractive

Trade Buy 1 April $65.00 Put at $1.80 Sell 1 April $60.00 Put at $0.60 For a net debit of $1.20 Profit/Loss Analysis Breakeven at $63.80 Maximum profit is $380.00 at strike of $60.00 Maximum loss is ($120.00) at strike of $65.00 Closing Summary Sold 1 April $65.00 Put at $0.00 Bought 1 April $60.00 Put at $0.00

Position closed on 4/19/2013 at price of $0.00 with a -100.00% loss in 66 days.

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