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Nordstrom (JWN - option chain) shares are rising today after the company said its August same-store sales rose 6.3%, topping analysts' forecasts of 5.9% growth. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on JWN.JWN opened this morning at $31.79. So far today the stock has hit a low of $31.38 and a high of $32.92. As of 12:30, JWN is trading at $32.29 up $1.97 (6.5%). The chart for JWN looks neutral and S&P gives JWN a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $28 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 14.3% return in three months as long as JWN is above $28 at October expiration. Nordstrom would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
JWN has not been below $32.50 since September of last year and has shown support around $28.50 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in JWN.
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