Macy’s Inc (M) is a retailer operating stores and websites under the Macy’s and Bloomingdale’s brands in the United States, Guam and Puerto Rico. The company’s stock is currently trading around $46.80 in a 52 week range of $36.30-$50.77. The stock has been performing well this year adding nearly 20% to share prices year to date. Macy’s is set to report their most recent quarterly earnings tomorrow before the market open. The stock has been a mixed performer on earnings day over the past 8 quarters. In the past 8 quarters the stock has rallied 4 times and sold off 4 times on earnings day moving 3.1% on average. On a chart shares of M are once again trading in bullish territory for the first time since mid-August. The future cloud is also beginning to slope upward suggesting there could be strength in M through the end of the year. We believe that the technical picture coupled with historical performance sets up well for a long ahead of earnings. With the options market currently implying a move of around $3.45 by November expiration we can calculate an upside target and set up a trade.
Trade: Buying the M Nov 49-50 Call Spread for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $49.25
