Full disclosure, my Mom is a long time fan of TJ Maxx (TJX). Me, not so much. I am sure there is plenty of good stuff in those stores, if you are willing to work for it. I am not willing. That said, the allure of different brands for multiple demographics has made the company a retail force in the aftermath of the financial crisis, offering high quality brands at discount prices.
This is not lost on investors as the company has doubled sales in the last decade to $30 billion and the stock has rallied 650% from its lows in 2008 at the height of the financial crisis, more than 3x that of the S&P500 in the same time period.
Over the last two years the stock has been volatile, trading between $50 on the downside, and $70 on the upside, having just recently bounced off of near term support at $64:
In mid May the stock gapped higher on earnings and buyback guidance, but the stock quickly gave back the gains (circled in red below). I would also add that the 50 day moving average (purple below) appears to be poised to cross below the 200 day moving average (yellow below) for a death cross, which could put $64 support in play on the slightest bit of bad news:
The next identifiable catalyst will be Q2 earnings scheduled for August 18th, any problems there and the stock is $60 quickly. Implied vol is low, with 30 day at the money IV just off of 52 week low, at just under 17%s:
I am going to keep this simple and look to leg into a put spread by first buying a naked put:
Trade TJX ($66.60) Buy Aug 65 Put for 1.50
Break-Even on Aug Expiration:
Profits: below $63.50
Losses: up to 1.50 between $63.50 and $65, max loss of 1.50 above $65.
Rationale: The technical set up is weak, the stock reacted poorly to perceived good news last month and options are cheap. If I get the chance to sell a lower strike put on a move lower to reduce my break-even prior to Q2 results I will. As usual with long premium directional trades I will use a 50% premium stop.