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DailyPlay – TJX – Feb 28, 2022

View TJX Trade

Strategy Details

Strategy: Call Debit Spread

Strategy Direction: Bullish

Details: Buy to open April 14, 2022 $65/$72.5 Call Vertical @ $3.15 Debit

Counter Trend Signal: This is a bullish strategy on a stock or ETF that is experiencing a bearish trend. 

1M/6M Trends: Bearish/Bearish

Technical Score: 4/10

OptionsPlay Score: 94

Entering the Trade

Use the following details to enter the trade on your trading platform. Please note that if there is a multi-leg option strategy, it should be entered as a single trade. 

Investment Rationale

TJX managed to break above the $68 level in November 2020 and has remained rangebound since. However, relative to the XRT retail sector ETF, TJX has shown outperformance in recent weeks. From a fundamental perspective, TJX is trading at roughly 15x next year’s earnings, a significant discount to the 5 year average of 22x. 

Thus, we will look to buy the April 14 $65/$72.5 call spread for a $3.15 Debit. As this is a debit spread, we will be looking to take profits anywhere between 75%-100% and cut losses around 50%. 

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Tony Zhang