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Even the snow could not stop the shoppers this past month; the nation’s retailers, even many of the boutique firms, posted stronger-than-expected same-store-sales growth in February. This improvement in sales could be perceived as very bullish and one way to play this strength is through the Retail HOLDRs Trust (NYSE: RTH). Our Idea Generating Platform (IGP) found an in-the-money bull call spread for investors who think this retailing strength should continue through April.
RTH Debit Spread Trade Detail
The RTH is currently trading at $97.15. The ETF is up roughly half a percent today and has reached a new 52-week high.
Debit Spread/Bull Call Spread -
By opening a free virtual trading account with OptionsHouse, you can build a profit/loss diagram to help visualize this trade.
Profit/Loss Details:
Maximum risk: $4.30 (the debit paid at the time of the trade) plus commissions.
Maximum potential profit: $0.70 (the difference between strike prices -5 – minus the debit of $4.30). Return on risk is approximately 16% in 43 days.
Breakeven: $94.30 (the strike price of the purchased call plus the debit paid).
Remember, trading Ideas are generated by the ONN Idea Generating Platform as a starting point for people to begin their own research. Trading ideas are not intended as trading or investment advice or recommendations that any particular security or strategy may be suitable for any specific person. You are solely responsible for your investment decisions, but we hope that some of these ideas will give you a starting point as you look for strategies to employ.
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