Here's How One Retail Bull Plans to Buck the Trend
TradingAnalysis.com analyst Todd Gordon is betting on retail stocks despite the beating they've gotten this year, CNBC reported.
Gordon said the SPDR S&P Retail ETF (XRT) - Get Report offers some "support" around the $38.50 level, which is close to where it finished trading Thursday. If the ETF holds around that level, it could "actually bounce back and retest the $40 or $41 level that it last hit in early August," Gordon said.
Gordon is playing the options market for his bullish move, selling the September monthly 39-strike put and buying the September monthly 35-strike put for a net credit of 84 cents, or $84 per options spread. If the XRT closes above $39 of September 15, Gordon makes an $84 credit on the trade. If it closes below $35, Gordon loses $316.
But Gordon plans to exit the trade early to avoid such a major loss in a countertrend trade. He'll get out if the XRT falls below $38, around the support line he's established. The XRT has trended down 13% since the start of the year to $38.32 at Thursday's close.
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