The Gap, Inc (GPS) is an apparel and accessories company with operations around the world. The company’s stock is currently trading around $41.00 in a 52 week range of $36.13-$46.56. The stock has been doing relatively well this year with shares of GPS rallying by nearly 5% year to date. The company is set to release their most recent quarterly earnings today after the bell. Analysts are expecting GPS to report EPS of $0.57 on revenue of $3.7 billion. The stock is a mixed performer on earnings, rallying 4 times and selling off 4 times on earnings over the past 8 quarters. Technically speaking GPS is breaking some key levels to the upside with stock attempting to break above the daily Ichimoku Cloud during today’s session. Currently, the options market is implying a move of $1.50 in GPS by this Friday’s expiration. With this implied move a trader can calculate measured move targets in GPS and use them to set up a trade.
Upside Target: $42.50
Downside Target: $39.50
Bearish Setup:
Buying the GPS May 23rd Weekly 40.5-39.50 Put Spread for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $40.20
Bullish Setup:
Buying the GPS May 23rd Weekly 41.50-42.50 Call Spread for $0.30
Risk: $30 per 1 lot
Reward: $70 per 1 lot
Breakeven: $41.80