FDO trade ideas
Macy's Gap fill trade Entry level @ $17.22 with upside target at the gap fill $18.00.
Could possible set up a much higher move given the short interest in the stock.
Bullish call activity in Macy's todayMacy's looks pretty undervalued right now, with a current P/E of 5.33, a forward P/E of 6.28, and a dividend yield near 10%. The stock is getting unusual bullish call option activity today, with double the normal volume, and it looks to be trying to breakout above previous resistance. The risk here is that the company's earnings are currently expected to decline over the next two years. However, Macy's surprised analysts last quarter, and it recently got a small upward revision of its two-year forecast. More upward revisions may be coming, especially if it surprises again. The company next reports earnings on February 25.
$M Macys attracting the late money desperate for returns in 2019Entry level $16.75 = Traget price $17.82 at gap fill start, re eneter if broken on volume
Stop loss $16.29.
Very noteable break above the MA100 whilke 7&12 ma's have crossed bullishly.
Volume is steadily increasing.
The stock is attracting late money chasing returns.
Indicators are all in bullish formation.
9.14% yield
33% short interest could really ignite a major rally
M - LONG SETUPBEEN SELLING OFF FOR AWHILE NOW. ON HISTORICAL SUPPORT SHOWING DIVERGENCE ON BOTH OSCILLATORS.
THE WEEK AHEAD: HD, LOW, TGT, GPS, M EARNINGS; /NG, VIX, VXXEARNINGS:
HD (24/21) (Tuesday Before Market)
LOW (68/35) (Wednesday Before Market)
TGT (66/37) (Wednesday Before Market)
GPS (60/53) (Thursday After Market)
M (97/67) (Thursday Before Market)
Pictured here is an M short straddle at the 17 strike in the December cycle, paying 2.73 with 14/72/19.73 break evens, and delta/theta metrics of -4.49/3.77. Look to put on a play on Wednesday before the end of the New York session.
In second place for ideal volatility contraction metrics is GPS (60/53). As with M, I would short straddle here, with the December 20th 18 paying 2.22 with 15/78/20.22 break evens, and delta/theta metrics of 1.29/3.06.
EXCHANGE-TRADED FUNDS:
TLT (42/12)
EEM (40/17)
SLV (29/20)
EWZ (26/27)
FXI (26/19)
... with the first expiry in which the at-the-money short straddle pays more than 10% of the value of the underlying: TLT, January '21; EEM, June; SLV, July; EWZ, March; and FXI, May. Both the rank/implied metrics, as well as the short straddle value metric indicate that it's probably a good time to hand sit on selling shorter duration premium here.
BROAD MARKET:
With VIX finishing the week at 12.05, volatility is at or near 52 week lows here in all the majors: SPY's in the 6th percentile; IWM in the 4th; and QQQ at 0.
The first expiry in which the at-the money short straddle pays greater than 10% of the value of the underlying: SPY, Sept; IWM, June; and QQQ, June. Both the rank/implied metrics, as well as the short straddle value metric indicate that it's probably a good time to hand sit on selling shorter duration premium here.
FUTURES:
/6B (63/11)
/NG (40/59)
/ZS (30/20)
/SI (29/19)
/CL (24/33)
As I may have mentioned last week, it's no surprise that /NG volatility is frisking up here. Generally, I play natty for seasonality, so look to get in with something bullish assumption at seasonal lows/peak injection, bail out of the long delta position in January or February depending on how Mother Nature feels, and then look to ride the elevator down in the opposite direction with a short delta position. I'm not keen on selling nondirectional premium (e.g., iron condors), particularly given what natty did last winter, so am sticking with my traditional, no-nonsense seasonality play.
Another item of note: GVX (gold volatility) has dropped substantially here, finishing the week at 11.22, in the 23rd percentile for the year ... .
VIX/VIX DERIVATIVES:
As previously mentioned, VIX closed the week at near 2019 lows (12.05), with the December, January, and February /VX contracts trading at 15.09, 16.60, and 17.50, respectively. Consequently, VIX term structure trades are still viable in the January and February expiries, but would probably beg off a December setup in the absence of a pop that runs that contract up to >16; the 16 strike is generally the lowest I will go with the short option leg of a VIX term structure trade.
As far as derivatives are concerned, this definitely isn't the place to be adding shorts. While it may be that VIX hangs out at these levels for a lengthy period of time, shorts are most productive on VIX pops -- not at VIX lows, even if contango and beta slippage are really working in shorts' favor here. As we all know, both the current steep contango and low VIX levels can evaporate in a heartbeat. If anything, this may be one of the rare occasions to consider a small bullish assumption trade (e.g., a VXX December 20th 15/17/17/19 "Super Bull,"* paying a .20 credit, with max profit/loss metrics of 2.20/1.80 and a break even of 16.80 versus the 17.40 where VXX is currently trading).
* -- A 15/17 short put vertical combined with a 17/19 long call vertical.
M is due for a bounce off multi-year support at $15The RSI is signaling oversold conditions at just over 30.
The stock is hovering near multi-year lows despite having done well fundamentally. There could be a rally in the cards in the near future.
If long-term support is broken amid a sustained selloff, however, there might still be some pain before bottoming out. Closing well below $15 for a few weeks in a row could signal decreased confidence in M. All things considered, a rally from the lows looks more likely. If nothing else, expect a period of consolidation to form around the present support level of $15.
I'm rating this as neutral even though I'm bullish because the downward trend is so strong that it's possible to continue trending lower beyond the long-term support.
Game Plan Macy's - 8.5% DividendPersonally i think a lot of people gonna protect their capital in some of these high paying yield retailers who have taken a hit. past couple months.
That's why i expect a squeeze soon with 2 gap fill targets (seen on chart)
Contrarius Investment Management's Buying Pattern Never go back to the scheme of the crime. That last re-entry is not looking like it was a good decision. Even if it does work, the risk that it created outweighs any potential gains
$M Above 17.17 LONG targeting 18.18 and 21 in long termAfter long oversold period its look like its real uptrend for long positions but targets will be slowly achieved
M looking forward Deeply oversold! The price is near Gann line 8/1 Monthly time frame.
S/L at 1$4, T/P at $18.31
MACY'S sells off heavily into earnings. Optimism is low heading into earnings and we can not find any positives from a technical perspective, fundamentally the stock trades at a very low 5.45 P/E ratio , with a good +7% dividend. Currently it is the dividend that is holding weakening investor interests, tomorrows earnings will test their resolve.
Given the fact that NYSE:M have such a high dependency on a chinese based supply chain, tariffs are more than likely going to hit the bottom line, but to what extent?
AVERAGE ANALYSTS PRICE TARGET $22
AVERAGE ANALYSTS RECOMMENDATION HOLD
P/E RATIO 5.45
SHORT INTEREST 13.16%
COMPANY PROFILE
Macy's, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. Its brands include Macy's, Bloomingdale's, and Bluemercury. It offers men's, women's, and children's apparel, women's accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland Hussey Macy Sr. on March 6, 1929 and is headquartered in Cincinnati, OH.
THE WEEK AHEAD: M EARNINGS; GDXJ, XOP, QQQ, IWM, VIXEARNINGS:
M (87/58) announces earnings this week and has the most appropriate rank/implied volatility metrics for a contraction play.
Pictured here is a narrow short strangle in the September monthly that is almost a short straddle, set up this way primarily because M is trading at 19.43, which Is smack dab in the middle of the short strikes. It's paying 2.25 at the mid-price with delta/theta metrics of -4.39/3.11. For those looking for more room to be wrong, the 17/22 short strangle is paying .89 which is a somewhat marginal play at 50 max (.45).
Given the fact that it has been somewhat hammered, I could also see taking a bullish assumption short put shot with the 22 delta 17 strike paying .52, the 31 delta 18 paying .83, and the 42 delta 19 strike paying 1.25. For those looking to potentially acquire, it pays an annualized dividend of 1.51 with a yield of 7.39% at current share price.
EXCHANGE-TRADED FUNDS:
SLV (98/26)
GDX (97/34)
GDXJ (94/40)
TLT (88/14)
GLD (87/16)
XOP (46/39)
Having worked through setups on all of these, only GDXJ and XOP appear to present worthwhile nondirectional premium selling opportunities in the September monthly with their respective at-the-money short straddles paying in excess of 10% of the value of the stock.
The GDXJ September 20th 42 short straddle is paying 4.68 versus 41.84 spot (11.2%) with the 37/49 short strangle camped out around the 16 delta paying 1.09.
Similarly, the XOP September 20th 22 short straddle is paying 2.29 versus 22.29 spot (10.3%) with the 22/23 short strangle straddling current price paying 1.81 should you want a more delta neutral setup with a smidge of room for intratrade adjustment without going inverted.
BROAD MARKET:
EEM (37/20)
IWM (33/22)
SPY (31/18)
QQQ (31/21)
EFA (17/15)
As with the exchange-traded funds, I'm looking for setups whose at-the-money short straddles pay more than 10% of the value of where the stock is currently trading.* Because background volatility in broad market is lower than in the exchange-traded funds which are, in turn, lower than that in single name as a general rule, you'll have to go farther out in time to get paid more than 10%.
Only QQQ and IWM meet the 10% test without going crazy far out in time (although I recognize that some might consider going out to February for a play is "crazy far out").
The QQQ January 17th 186 short straddle is paying 19.23 versus 186.49 spot (10.3%) with the January 17th short strangle set up around the 16 delta strikes -- the 160/207, paying 4.40.
Similarly, the IWM February 21st 151 short straddle is paying 16.02 versus 150.62 spot (10.6%) with the 16 delta February 21st 130/168 paying 3.86.
VIX/VIX DERIVATIVES:
For you "Vol Heads" ... .
VIX closed at 17.97 on Friday with the August /VX contract trading at 18.48, so the term structure is in contango from the front month to spot. M1-M2 is also in a smidge of contango, but M2-M5 are in backwardation, presenting a wonky S-shaped term structure. Look to potentially add VXX/UVXY bearish assumption setups on VIX pops back to >20 ... .
* -- Although you're certainly free to sell at-the-money straddles in these instruments, I'm using the short straddle value as more of a test to see whether the premium is sufficient to be "worth it." If it isn't worth It at-the-money, then out-of-the-money short strangles are probably aren't worth it, either.
Simple M analysis and playLook, you can get as complicated as you want with charts but on this one we'll keep super simple. Yep, not just simple, but SUPER SIMPLE. LOL
M has a great P/E and a strong high yield making a popular value play for funds and really anyone that wants steady growth/returns.
Our analysis is this simple: The last time M broke off this level was back in November of 2017. This triggered a huge 6-month run.
We think a break above about $22.25 - $22.75 will trigger the same kind of run. It also seems like retail is starting to get some love and earnings season for retail (See Pepsi) is starting off fairly strong.
To take advantage of this while avoiding any short term volatility, we will buy the $24 Calls going out to 1/17/202 and we'll buy them at or under $1.10
Macy`sPossible trend reversal in play.... The targets on the chart are near term.... Mid term target is 59.00, and the Looong term is a whopping $129
MACY'S - Good stock to buy for dividends?In the past couple of years some of the retail stocks has fallen dramatically, which makes it possible to buy them now with a very good discount. Right now I see an uptrend and possible level of $18-25, from which I plan to buy for long-term. my next buy will be @ $5-10.
$M Iron Butterfly OpportunityAs I stated in the related and previous idea, IV is dropping across the market unless the stock has upcoming earnings or the stock is related to gold. For more on my analysis behind trades like this, check out this YouTube video: >>youtube.com/watch?v=snPDcCSdyLY<<
