UPCOMING STOCK SPLIT

Ross Stores (ROST) has just announced a 2:1 stock split. This is an exciting one. Last time we played one of these, LuluLemon Athletica (LULU), several times. Some students did very well. This one is with a more established company, a huge company. Ross made this announcement along with their earnings report. They are making a lot of money and the earnings are growing. They've had 14 quarters in a row of profitable operations.

Along with this announcement, they also announced a dividend of .22 cents a share to be paid the end of December. I don't see this as a stand alone play, it's just nice to have it in the background. The stock split will be Dec. 15th. That's the week of option expirations. Some of my students plan on playing this several times---remember, I've isolated five times to play the split. So get a chart, keep it in front of you and let's learn as we go.

One student, Molly, is already in the $87.50 call options for $2.20. I like these December strike prices: $87.50, $90, $92.50, $95, $97.50. Maybe later, the $100, but for .05 more cents right now you can buy the $97.50 and move down $2.50 on the strike price. If you don't know how to get option prices, go to YahooFinance.com and punch in the ticker symbol. Now click on the option button and it will take you to the option chain. You'll have to determine from there what kind of information---read that prices---you want. Always look at the current month and the next month out to get some perspective.

The game is afoot. Past is not present, but look at a three month chart. It's moved up nicely. It's coming up on Christmas. And then the next earnings season, and before that the dividend. It's a perfect storm. Yes, there is always the back-drop of the economy and the craziness in Washington, but it looks good.
The stock could easily stay here, and move around---like a rolling pattern---but, I wouldn't be surprised to see it go to $100 or above. I'll try to keep you posted. This one would be a good one to paper-trade. If so, buy ten contracts of the $95 calls for December. They were going for .40 cents on Friday. That would cost you $400.  Shoot for a double, and get out at $800. That would be a good simu-trade.
More on this exciting development later.