Buying TSCO call contracts.
Tractor Supply (TSCO) is a beneficiary of the exodus from urban cities.
The company caters to individual farmers, land owners, and even single family residences. Profit margins are strong and the stock has had a strong run.
After a pullback to start the year, TSCO is back close to all-time highs. The stock is reasonably priced compared to earnings. And with the Ukraine war triggering concerns of low food supplies, TSCO’s customer base will likely buy more seed, fertilizer and other products this spring.
We’re buying calls ahead of a potential break to new highs.
Buying in-the-money call contracts today gives us a chance to profit if TSCO moves higher. This approach also helps manage risk as these calls will retain some value even if shares pull back closer to our strike price.