Today’s trade is in a name that many American shoppers are familiar with.
You’ve probably seen TJ Maxx stores everywhere, frequently located in strip plazas throughout the suburbs. And there’s a good chance your family has dropped some loot in there, taking advantage of the deals they are famous for.
JC commented today that he’s invested in $TJX in his long-term account as a hedge for his wife’s spending at this store. I think many of us can relate.
But what’s got me most excited about this setup is the recent base just below $100, which would be an all-time high. Around here, we call that the hundred-dolla-roll, and it’s one of my favorite setups:
Additionally, TJX Companies will report quarterly earnings at the end of February, which may act as either an anticipatory catalyst for bulls to front-run or a binary catalyst that shoots us north of the $100 hurdle following the announcement. Either way, I like our odds.
Here’s the Play:
I like buying $TJX April 100-strike calls for approximately $1.60 per contract. This premium I pay today represents the most I can lose in this trade and I’ll size my position accordingly.
However, I’ll look to manage risk if $TJX can’t hold the 91.50 level. Any $TJX closing price below 91.50 is my signal that I’m early or wrong and I’ll salvage whatever is left of the call premium.
On the upside, I’ll wait for $TJX to clear $100 before I consider taking action. Oftentimes, when a hundred-dolla-roll happens, the stock will overshoot by several points before any natural retracement happens. With this in mind, if/when $TJX prints north of $105 per share, I’ll look to sell a portion of my position to take my original invested capital off the table. Then I’ll enjoy a free ride with whatever is left into April.
If you have any questions on this trade, please send them here.
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