The Home Depot, Inc (HD) is a home improvement retailer operating warehouse style stores selling assortments of building materials and home improvement goods. The company’s stock is currently trading around $79.90 in a 52 week range of $60.21-$81.56. The stock has been outperforming the market this year rallying over 29% year to date. The company is set to release its most recent quarterly earnings report tomorrow before the market open. Analysts are expecting HD to report earnings of $0.90 per share on revenues of $19.1 billion. Historically, HD is a strong performer on earnings day having rallied 5 of the past 8 quarters with an average moved of 2.5%. HD is trading relatively well on a chart as well with shares trading just off of their 53 week highs and well above the Ichimoku Cloud. We believe that both the historical performance in HD and the strong technical present a great opportunity to get long HD ahead of earnings. With the options market currently implying a move of around $2.75 by this Friday’s expiration we will look to set up a trade with a target around $82.75.
Trade: Buying the HD Nov 22nd 82-83 Call Spread for $0.25
Risk: $25 per 1 lot
Reward: $75 per 1 lot
Breakeven: $82.25
