Shares of Target Corporation NYSE: TGT are trading at fresh two-year lows following some downbeat guidance by the company. Valuation and dividend yield are the major two reasons Target should be considered as a core investment.

The payout ratio is a very conservative In fact, Target has increased the dividend for 44 consecutive years. Combine that with an ongoing commitment to stock buybacks and shares begins to look like a bargain.

Which Vertical Option Spread Should You Use? | Investopedia

Shares of TGT are getting extremely oversold. Nine-day RSI is under 15 and at levels indicative of an impending rally in the past.

Bull Call Spread

So a countertrend rally or stock market neopets consolidation is likely. This type of big-time institutional buying is many times indicative that informed buyers think a rally may be in the offing. So with TGT looking attractive on both a fundamental and profit of call option versus bull call spread basis, along with some unusual call buying, a short-term bull put spread is a conservative way to position bullishly with defined risk.

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Return on risk is With earnings due Feb. As of this writing, Tim Biggam did not hold a position in any of the aforementioned securities.

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