🕒 Market Overview: Target plunges 10% premarket following CEO Brian Cornell's unexpected departure announcement

🔄 Sector Insight: Put-call ratio surges to 1.36 as institutional investors rush for downside protection

💰 Today's Trade Idea: Bear Put Spread on TGT captures bearish momentum with defined risk parameters

SMART TRADE IDEA

Bear Put Spread on TGT.

Trade Setup:   Buy $95 Put / Sell $90 Put, October 17, 2025 expiration.

• Cost: $1.80 or lower ($180 per spread)

• Max Profit:  $3.20 ($320 per spread)

• Breakeven:   $93.20

Management Plan:  Exit at 50% loss, roll down, or take profits if TGT’s share price reaches $90 or lower.

The overall stock market is near its high, and TGT remains weak. The change in leadership, poor sales, and a bearish technical trend are compelling reasons for TGT to reach lower lows over the coming weeks. Meanwhile, stocks tend to be historically weak during October, making the October bearish put spread an ideal timing opportunity to capitalize on the current issues facing TGT shares. 

NOTE: Remember, options trading involves substantial risk and is not suitable for all investors. Consider your investment objectives, financial resources, and experience level before implementing this or any options strategy.

DISCLOSURE: Trade recommendations may have changed since publication. Evaluate current market prices and risk/reward before acting. Trading involves significant risk and is not suitable for everyone. This is not personalized investment advice. Past performance doesn't guarantee future results. Publisher and contributors may hold positions in recommended securities. Readers assume full responsibility for their trading decisions. Consult a financial professional before investing.

MARKET BREAKDOWN

Macro Lens – Big Picture Market Forces

Target's leadership crisis exposes deeper structural challenges facing traditional retail as markets rotate away from high-beta momentum stocks toward value plays. The announcement compounds sector-wide margin compression from tariff implementation, which has reduced retail margins by 150 basis points across the industry. Consumer spending patterns continue shifting away from discretionary retail, creating headwinds for big-box retailers attempting to maintain market share against both discount and premium competitors.

Sector and Stock Watch – Identifying Key Movers

Target's stock has declined 67.5% from its November 2021 peak of $268.98, establishing a clear bearish trend of lower highs and lower lows. The company reports eight consecutive quarters of flat or declining comparable sales, highlighting operational challenges beyond typical retail headwinds. Walmart maintains strength near all-time highs while Target languishes, illustrating competitive positioning divergence within the sector. Options markets reflect this weakness through elevated implied volatility levels, suggesting traders expect continued price swings for months ahead.

Trading Strategy in Focus – How to Play the Market

Bear put spreads capture downside momentum while limiting capital risk during periods of elevated volatility. This strategy profits from continued price decline while maintaining defined maximum loss parameters. Given Target's technical breakdown below key support levels and fundamental headwinds, vertical put spreads present asymmetric risk-reward profiles for traders positioning for further weakness.

Target (TGT) shares have been in a bearish trend since November 2021.

As the monthly chart highlights, TGT reached a record high of $268.98 in November 2021, before making lower highs and lower lows, resulting in a 67.5% decline at the most recent low of $87.35 in April 2025. The trend remains bearish, and the leadership change is adding to the uncertainty.

Target’s latest August 20 earnings report slightly beat the weak consensus forecast, but annual sales have been weak for the past four years as the big-box retailer’s traffic continues to decline. Target has not participated in the latest stock market rally and has underperformed its competitors. Walmart (WMT) shares remain close to the all-time peak, with TGT trailing badly.

The trend is always a trader or investor’s best friend, and it is bearish in TGT, suggesting that a lower low could be on the horizon. With TGT shares just over the $97 level, the October 17, 2025, $95-$90 vertical bear put spread at $1.80 or lower has a risk-reward ratio of at least 1:1.77.

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LATEST MARKET BREAKDOWN

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