JWN: A Stylish Play For Retail Bulls

Luxury retailer for everyman (and woman) Nordstrom Inc. (NYSE: JWN, $73.37) is scheduled to report earnings after the close of today’s session. JWN shares have been in vogue for investors in 2014, having rallied nearly 19% year to date.

JWN shares have traded in a 52-week range of $54.90-$73.94, having hit a new all time high during last Thursday’s session.

For today’s upcoming earnings report, consensus analyst estimates are calling for EPS of $0.71 on revenues of $3.1 billion. For the same quarter on year prior, Nordstrom reported EPS of $0.69 (beating estimates by $0.03) on $2.88 billion in revenue

JWN offers no weekly options so traders wishing to play catalyst movement must turn to the standard Nov expiration contracts, expiring in 8 days on Friday November 21.

Markets for both the JWN Nov 72.5 and Nov 75 Straddles are about a quarter wide, implying about a 5.7% move in the range of $4.03-$4.31.

Historically, JWN stock has sold off on 3 of the past 4 quarters and 6 of the past 8. Following Macy’s (NYSE: M, $61.73) strong post-earnings performance, KOTM traders are positioning themselves to the long side going int today’s report.

The Trade: Buy the JWN Nov 75-77.5 Call Spread for about $0.70
Risk: $70 per 1 Lot
Reward: up to $180 per 1 Lot
Break-even stock price (at expiration): $75.70

Greeks of this trade
Delta: Long
Gamma: Long
Theta: Short
Vega: Long