August 29, 2023
Buy the TJX (TJX) April 92.5 Calls (exp. 4/19/2024) for $7.25 or less.
After a couple weeks of nasty selling, the market is showing some signs of life today. And while the three weeks of selling weren’t particularly fun, there was some upside to the weakness as it was easy to spot the strongest stocks in a bad market. This brings me to TJX (TJX).
Retail stocks were mostly obliterated during earnings season as countless leaders from that group came under immense pressure. However, the one stock that was steady throughout, and actually gained ground during earnings season was TJX, which rallied from 86 to 89 on a big earnings beat and a positive conference call and is pushing out to a new high today. This stock strength has been impressive, and so has the option activity, including these trades in the last two weeks:
Today - Buyer of 1,000 TJX September 91 Calls for $1.25 – Stock at 91
Today - Seller of 1,000 TJX January 82.5 Puts for $1.41 – Stock at 91
8/24 – Buyer of 1,500 TJX June 95 Calls for $6.05 – Stock at 89
8/21 – Buyer of 1,500 TJX January 90 Calls for $4.90 – Stock at 88.7
While the option activity is not “overwhelming” the combination of this positioning, the stock strength and the market potentially getting back in gear is an intriguing situation that I want to get involved with.
To execute this trade you need to:
Buy to Open the TJX April 92.5 Call
The most you can lose on this trade is the premium paid, or $725 per call purchased.
The risks I see in this trade are largely market-related, and it’s certainly possible that the indexes could fall yet again.
That being said, I really like the TJX stock strength in recent months, and to pay $7.25 for a call with eight months until expiration is a great risk/reward.
Finally, here are the updated price targets for TJX shares following the big earnings beat two weeks ago:
Loop Capital - $100 price target
Telsey Advisory - $100 price target
Jefferies - $110 price target
Morgan Stanley - $99 price target
Citi - $103 price target
Bank of America - $102 price target
Barclays - $101 price target
|Position (Original)||TJX April 92.5 Calls|
|Position Strategy||Buy Call|
|Opened Date||August 29, 2023|
|Expiration||April 19, 2024|