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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.
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.
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.
About the Author
Tom Gentile is widely known as America's #1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Now, he's diving into the biggest market in the world - one that almost no one has heard of before.