Burlington Stores: 1 Month Later Update On BURL Calls

The market situation today is not in any way encouraging as the S&P 500 is managing to stay above the 2000 mark as it held at $2001.95 at 11:05 AM EST. Tesla is taking a hit after Elon Musk revealed that China sales are disappointing and Apple took aim at GoPro to send shares of the latter crashing.

Nonetheless, I am still holding out with my predominantly bullish thesis and I will still be looking at call options at least until the end of this week. In today’s piece, we will reexamine our coverage on the options of Burlington Stores Inc. (NYSE:BURL).

Burlington Stores with its market capitalization of $3.57B is a national off-price retailer of branded apparel, operating 503 stores, inclusive of an Internet store, in 44 states and Puerto Rico. The Company offers its merchandise using an Every Day Low Price (EDLP) model with savings up to 60-70% off department and specialty store regular prices.

One Month Later, Update on BURL Calls

I have written at length about trading BURL call options in 2014 but the stock has not for once failed to deliver beyond expectations. You can see some of my previous coverage on Burlington Stores here, here and here.

In my last post on Burlington Stores, I talked about how strong Q3 performance is encouraging the bullish action and I gave the stock a $45 price target in which I recommended the BURL Mar 2015 45.000 call (BURL150320C00045000) at an asking price of $3.30.

When I wrote that piece, the shares of Burlington Stores were trading around $43.20 and the options contract that I recommended had a $3.30 asking price. As at 11:15AM EST today, the shares of Burlington were trading around $48.23 per share to mark an 11.64% increase in the share price. The BURL Mar 2014 45 call had an asking price of $5.80 to mark a 75.75% increase in a little over one month.

Impressive Stock Performance

BURL Chart

The chart above shows how the shares of Burlington Stores have traded in the last one year. You will observe that the stock has been northbound for much of last year as it jumped from a 52-week low of $23.88 to a 52-Week high of $50.50. Interestingly, the stock has developed support levels all along the way and the last support point was at $46. Hence, we can reasonably expect the stock to continue its bullish ascent in the next couple of months.

Hence, I think we can still hang on to the BURL Mar 2014 45 call as the contract continues to soar. Nonetheless, to be on the safer side, you might want to manage the trade with stop/limit loss orders along the way. Since we have established that the stock has a support at $46, we can safely hold our March options trade and set a sell/limit a $46.50. For the options contract, I recommend setting your stop/limit order at $5.50, which would still give us a 66.66% gain.

If you are new to the BURL calls party, you can still play the BURL Mar 2015 45.000 call (BURL150320C00045000) at an asking price of $5.80. You should also take advantage of stop/limit loss orders by setting the limit at $5.50.

 

— Daily Option Alerts

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