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February 2015 Options for Michael Kors Hit the Market

Michael Kors

Investors in Michael Kors Holdings Ltd. saw new options begin trading today for the February 2015 expiration. At Stock Options Channel, the YieldBoost formula looked up and down the KORS options chain for the new February 2015 contracts and identified one put and one call contract of particular interest, TheStreet said.

The put contract at the $75.00 strike price has a current bid of $3.20. If an investor was to sell-to-open that put contract, they are committing to purchase the stock at $75.00, but will also collect the premium, putting the cost basis of the shares at $71.80 (before broker commissions). To an investor already interested in purchasing shares of KORS, that could represent an attractive alternative to paying $75.40/share today, the report said.

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Because the $75.00 strike represents an approximate 1% discount to the current trading price of the stock (in other words it is out-of-the-money by that percentage), there is also the possibility that the put contract would expire worthless. The current analytical data (including greeks and implied greeks) suggest the current odds of that happening are 54%, TheStreet said.

Stock Options Channel will track those odds over time to see how they change, publishing a chart of those numbers on its website under the contract detail page for this contract. Should the contract expire worthless, the premium would represent a 4.27% return on the cash commitment, or 35.39% annualized — at Stock Options Channel they call it the YieldBoost, the report said.

Meanwhile, spotlighted Michael Kors as one of four luxury brands with mixed results in 2014 amid high consumer confidence in the United States.

It said Michael Kors began 2014 on the right foot, beating analyst consensus for revenue and earnings per share in their quarterly report released in early February. This strong streak lasted well into the year. However, the company’s most recent quarterly report, released on November 4th, posted earnings at the low end of analyst estimates and posted the smallest sales growth in 4 quarters, the article said.

Additionally, the luxury shoe and accessory company announced plans to relocate headquarters from Hong Kong to London. In 2015, Michael Kors fans can look forward to a new line of eyeglasses that Kors will be producing with Luxottica Group, said.

KORS has a 52-week high of $101.04 and a 52-week low of $68.25.

On December 29th, analyst Robert Ohmes of Bank of America/Merrill Lynch reiterated a Buy rating on KORS with a price target of $120. Ohmes noted that Kors had a successful holiday shopping season, stating that traffic “appeared high at full-price and outlet stores” and that “Full-price and outlet stores were tightly packed with long check-out lines.” He continued, “KORS ‘innovative’ brand positioning gives the company the freedom to potentially become a dominant accessible luxury brand in multiple categories… as it targets the rapidly evolving, next generation of global consumers“, the article said.

Robert Ohmes has a 71% overall success rate recommending stocks with a +9.3% average return per recommendation. The general consensus for Michael Kors on TipRanks is Hold.



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