Urban Outfitters, Inc. (URBN) is an apparel and accessories company operating under multiple brands both in brick and mortar stores and online channels. The company’s stock is currently trading around $30.90 in a 52 week range of $29.11-$40.67. The stock has been relatively weak this year with shares falling by 16.77% year to date. The company is set to report earnings Monday afternoon.
The stock has sold off on earnings day 5 of the past 8 quarters with an average move of 4.7%. The options market is currently implying a move of about $1.90 by November expiration. This implies a 6.1% move on earnings, higher than the historical average. Although URBN has a bearish earnings record we have seen other names in the space report solid quarters and perform well since. With mixed metrics surrounding URBN and a larger than normal move being implied I will be looking to get short premium and fade the movement in URBN.
Trade: Selling the URBN Nov 29-31-33 Iron Butterfly for $1.35
Risk: $65 per 1 lot
Reward: $135 per 1 lot
Breakeven: $29.65 and $32.35