The holiday shopping season is upon us and the hype is enormous so we tested to see if they hype led to increased opportunities in the retail sector. Watch this segment to see if there is a high probability trade available or if you should instead be planning to do something with all those leftovers.
You’ve seen the ads and some may even be thinking of getting in line Thanksgiving day for those “door-busters”. Stories on retail stocks dominate the news. So how is retail doing?
A table of the biggest holiday revenue source retail stocks were displayed. The table showed the stock’s symbol, name of the company and their 2015 return. Stocks included were AMZN, ANF, BBY, COH, COST, HD, JCP, M, TGT and WMT. A second table examined the average return of the retail stocks and the SPY (S&P 500 ETF) the day before Thanksgiving (since 2007) and compared and the minimum and maximum returns to a week after Thanksgiving.
A final table provided the statistics of selling short a 1 standard deviation strangle in the XRT (Retail ETF) the day before Thanksgiving since 2007. We used the options the closest to 45 days-to-expiration (DTE) with a 17 delta on each side. The table included the percentage profitable at expiration, average P/L at expiration and largest profit. The results are compelling
Watch this segment of “Market Measures” with Tom Sosnoff and Tom Preston for the takeaways and the results of the study of short strangles in the XRT (Retail ETF) around Black Friday.
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