Why the Toys R Us Shutdown Is Good for Your Portfolio

Tom Gentile

Editor's Note: Any investor knows that most brick-and-mortar stocks are falling faster than ever. But buying shares of their rising e-commerce competitors – AMZN, BIDU, and BKNG (formerly PCLN) – can be overwhelmingly expensive. Fortunately, Tom Gentile discovered a way you could double your money on these soaring companies in 4 days or less… starting with as little as $500. Sound impossible? Click here to see it for yourself.

Yesterday (March 15), Toys R Us confirmed plans to liquidate its U.S. business.

Last September, the beloved toy store filed for bankruptcy.

They've already closed 180 of their 800 stores, but shutting them all down was never part of their original plan (it never is). Expectations were for a re-structuring of the company that would prevent that from happening.

Fast-forward to this week's announcement of the closing of their remaining stores permanently.

Now for many, the Toys R Us shutdown news is pretty unsettling. Toys R Us has been a household name – a childhood favorite. Making that trip to pick out the perfect toy for being good or getting outstanding grades was something a lot of us looked forward to when we were kids.

And for parents, the memories of battling holiday mobs to get the last Tickle Me Elmo or a Cabbage Patch Doll still bring laughter around the family table.

So hearing that another Goliath like Toys R Us – one you'd always think would be around – is closing is enough for some traders and investors to start dumping all their retail shares.

But that's actually one of the worst things to do – especially to your portfolio.

Here's why…

It's Not Too Late to Turn a Profit on Brick-and-Mortar Stores

We've talked about the challenges in retail before.

And at times like, I favor trading strategies like going long puts or using bear put spreads to take advantage of stocks I feel are going to trade down.

But the opposite stance could be to look for bullish option trading opportunities in the ever growing e-commerce field, like Amazon.com Inc. (Nasdaq: AMZN) or Baidu Inc. (Nasdaq: BIDU).

And that's the great thing about being an options trader.

You can always position your money in a manner that can make gains based purely on your assessment of the company's future – whether they be up or down.

For example, if you own shares of Hasbro Inc. (Nasdaq: HAS) or Mattel Inc. (Nasdaq: MAT), you may be feeling nervous about the series of downs it has taken over the past few weeks…

But at times like this, there is no reason to let nerves take the lead. Just step back and assess the situation.

Tom Gentile

About the Author

Browse Tom's articles | View Tom's research services

Tom Gentile is one of the world's foremost authorities on stock, futures and options trading.

With more than 25 years' experience trading stocks, futures, and options, Tom's style of trading systems and strategies are designed to help individual investors propel themselves past 99 percent of the trading crowd.

… Read full bio