$LOW daily pick: sell Nov 13 $195 put (buy-side)

$LOW: I'm selling the Nov 13 $195 put and getting paid to wait on Lowe's.

As of midday today ($203.74):
11% below the 200-day and 30% off the February high
Credit $2.25 for ~1.2% in 22 days (~19% annualized)
Breakeven $192.75, about 5% below today
About 16.6x this year's EPS estimate with a 6% free cash flow yield

I think the housing freeze is mostly priced in because Lowe's still grew sales 8% last quarter and beat on EPS. If I get assigned I'm fine owning it under $193.

Would you sell puts on Lowe's here or wait for mortgage rates to drop first?

Not financial advice

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Why a put and not shares? The stock just bounced 14% off the Oct 5 low and popped back over the 50-day today. I'd rather not chase a 3% up day so I'll let it come back to me and collect $225 while it decides.

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Don't have $19.5k sitting in cash? Defined-risk version: sell the $195 put and buy the $185 put for about $1.20 credit. Max risk $880 and breakeven $193.80. You lose the full $880 if it's under $185 on Nov 13.

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What invalidates it: a weekly close under the $178.45 Oct 5 low. Net debt is about 3x EBITDA after the pro distributor deals so I don't want to fight a broken chart. Earnings are Nov 18 so this put expires before the print.

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What I'd watch: whether the pro business keeps carrying sales while DIY stays soft. The Street target is about $244 with 31 Buys and 19 Holds. The $5 a year dividend is a nice backstop if I end up owning shares.

Sources: FMP: $LOW quote, estimates, key metrics, dividends and price history · Robinhood: $LOW live quote and Nov 13 option chain (Oct 22, 12:14pm ET) · Simply Wall St: Lowe's leans on pro expansion (FBM and ADG deals), Oct 20 · TradingKey: Home Depot up 3% on Oct 22 on rate hopes · MarketBeat: Home Depot and Lowe's hit 52-week lows (Oct 11) · 24/7 Wall St: Lowe's dividend and the frozen housing market (Oct 14)

Not financial advice. For informational and educational purposes only.