Fading any rally in brick-and-mortar retail stocks has proven to be a smart trading strategy so far this year. However, some retailers have been unfairly pulled down with the rest of the bunch, and with earnings reports due up soon specific names could be setting up for big pops.
Among the stocks to watch is TJX Companies TJX – NYSE. Earlier today, a sharp trader bought 7,000 TJX August 72.5 calls for $1.20 apiece, nearly quadrupling the average daily call volume in TJX.
Costing $840,000, TJX has to increase 3.5% to the break-even price of $73.70 for this trade to pay off by expiration in less than a week and a half. TJX has dropped 11.2% just since this May, but the impending earnings announcement on August 15 serves as the obvious catalyst behind this trade. If TJX beats, our customer is in position to make $700,000 for every dollar shares rise above break-even.
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