Target (NYSE: TGT - option chain) shares are rising today after the company said it expects its second-quarter profit to meet or beat analysts' forecasts, despite reporting June same store sales that fell 6.2% year-over-year. 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 TGT.

TGT opened this morning at $38.96. So far today the stock has hit a low of $38.47 and a high of $39.30. As of 11:35, TGT is trading at $38.67 up $1.41 (3.8%). The chart for TGT looks bullish and S&P gives TGT a positive 4 STARS (out of 5) buy ranking.

Home Depot (NYSE: HD) reported its first quarter numbers today, topping Wall Street estimates, but cautioning that the company's business remains under pressure from the current housing crisis.

Ahead of today's earnings report, analysts had been expecting to see Home Depot, the nations largest home improvement retailer, show earnings of 29 cents per share for its first quarter, but the company surprised to the upside with 35 cents per share. Sounds like good news, but Wall Street has been selling the stock off so far in today's action.

Wal-Mart (NYSE: WMT), whose competitors include Target (NYSE: TGT) and Costco (NASDAQ: COST), reported same-store sales for the month of March. According to the press release, things are going pretty well at the retailer, given current economic conditions. Domestic comps over the nine-week frame rose 3.1% on an overall basis. Breaking that down to performance stats for Wal-Mart and Sam's Club on an individual basis, we see that the former increased its comps by 2.6% and that the latter improved its same-store sales by 6.1%. Over the five-week frame, comps weren't as good. They came in at 1.4%. Wal-Mart itself barely saw a move in the metric, rising 0.6%. Fear not, shareholders, for you have to consider the timing of the Easter holiday. It came early last year.

Now, international net sales didn't fare so well because of currency translations. If you decide to include that effect, then sales dipped well over 14% last month. Excluding currencies gives you a much more positive 7.8% increase. Can't really do much about currency issues right now. As we all know, all companies with international exposure have to face them. Nevertheless, I like Wal-Mart's comps. And I particularly like the performance at Sam's Club. A lot of consumers seem to be using the warehouse club to save money during the tough times. Wal-Mart's management is apparently reaching that shopper.

Urban Outfitters (NASDAQ: URBN - option chain) shares are headed higher today after the company announced this morning same-store sales that fell 1 percent in January and fourth-quarter same-store sales that rose 3 percent. With so many retail outlets showing declining sales, investors are responding favorably to any gains and even some moderate declines in sales. 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 URBN.

Walgreen Co. (NYSE: WAG - option chain) shares have moved higher today after the company reported December sales that rose upwards of 10%, including a 4.9% gain in same store sales. In times like these, WAG stayed strong with sales of basic necessities, while seasonal items slumped, but the net result was positive. 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 WAG.

WAG opened this morning at $25.43. So far today the stock has hit a low of $25.43 and a high of $26.78. As of 12:15, WAG is trading at $26.80, up $1.25 (4.9%). The chart for WAG looks neutral and S&P gives WAG a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $20 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 an 8.7% return in just three and a half months as long as WAG is above $20 at April expiration. Walgreen would have to fall by more than 25% before we would start to lose money. Learn more about this type of trade here.

WAG hasn't been below $21 at all in the past year and has shown support around $22.50 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 WAG.

McDonald's (NYSE: MCD - option chain) shares opened higher today, but have dropped into the red after the company announced November same-store sales growth of 7.7%, with US sales growing 4.5%. However, total sales only grew 1.9% when currency factors were included. Without currency fluctuations, total sales would have been up just under 10%. I for one like this company a tremendous amount in a weak economy, and even though the strong dollar is messing with the numbers, I think MCD is on solid ground. 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 MCD.

MCD opened this morning at $63.35. So far today the stock has hit a low of $60.86 and a high of $63.99. As of 12:15, MCD is trading at $61.37, down $1.35 (-2.1%). The chart for MCD looks bullish and S&P gives MCD a positive 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $50 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 an 8.7% return in just six weeks as long as MCD is above $50 at January expiration. McDonald's would have to fall by more than 18% before we would start to lose money. Learn more about this type of trade here.

MCD hasn't been below $50 at all except for one day in the past year and has shown support around $55 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 owns and controls bullish hedged positions in MCD.

The world has not been swayed by the coy laugh of organic vegetables, the winsome eyes of local produce, the sparkling personality of grass-fed beef. When money's tight, the world goes to McDonald's for a dollar burger, and maybe a splurge on Southern-style chicken, an opportunity to win big -- or small, that next package of French fries has to come from somewhere -- with the chain's traditional 'Monopoly' game. Same-store sales were up 8.2% worldwide, with a respectable 5.3% increase in U.S. outlets.

McDonald's Corporation (NYSE: MCD) is still struggling to gain Wall Street approval for many of its recent moves, such as expanding hours and diving head-first into competition with Starbucks, rolling out espresso bars and fancy blended coffee drinks into its U.S. stores. Given some rough numbers from Starbucks (NASDAQ: SBUX) out yesterday, it seems reasonable to wonder whether customers are avoiding the pricey pastries and coffee drinks at Starbucks and heading for the Dollar Menu at McDonald's.

Target (NYSE: TGT - option chain) shares are falling today after the company reported a 4.8 percent decline in October same-store sales this morning, worse than the 2.8 percent predicted by analysts. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on TGT.

This morning, TGT opened at $37.11. So far today the stock has hit a low of $36.74 and a high of $39.11. As of 12:25, TGT is trading at $36.77, down 98 cents (2.6%). The chart for TGT looks neutral and S&P gives TGT a 3 STARS (out of 5) hold ranking.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 an 8.7% return in two weeks as long as TGT is below $45 at November expiration. Target would have to rise by more than 22% before we would start to lose money. Learn more about this type of trade here.

TGT has been above $45 as recently as early October but has fallen sharply since and shown resistance around $42 over the past month.

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 TGT.

McDonald's (NYSE: MCD - option chain) shares are getting a lift today after the company reported an 8.5% boost in August same-store sales, helped by a better-than-expected jump in international sales. It seems like the financial crunch families could be feeling is being absorbed by moderately and higher priced chain restaurants, but the bargain fast-food joints are weathering the storm. 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 MCD.

MCD opened this morning at $63.00. So far today the stock has hit a low of $62.99 and a high of $64.65. As of 12:40, MCD is trading at $64.17, up $1.75 (2.8%). The chart for MCD looks neutral and S&P gives MCD a 3 STARS (out of 5) hold ranking.

For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $55 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 9.9% return in just three and a half months as long as MCD is above $55 at December expiration. McDonald's would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.

Abercrombie & Fitch (NYSE: ANF - option chain) shares are dropping sharply today after the company reported an 11% drop in August same-store sales when analysts had been expecting a 7.9% decrease. Last month, July sales disappointed investors and we pointed out a potential trade with an annualized return over 35%. That trade is still looking good for expiration in two weeks. Today, we have another similar trade idea if you missed out on the last one and still think this stock won't be rising too far in the coming months

This morning, ANF opened at $51.39. So far today the stock has hit a low of $50.87 and a high of $53.00. As of 12:00, ANF is trading at $51.29, down $3.42 (-6.2%). The chart for ANF looked slightly bullish before today and S&P gives ANF a positive 5 STARS (out of 5) strong buy ranking.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $65 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 an 8.7% return in eleven weeks as long as ANF is below $65 at November expiration. Abercrombie would have to rise by more than 25% before we would start to lose money. Learn more about this type of trade here.

ANF hasn't been above $35 since June and has shown resistance around $55 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 ANF.

Reuters reports that Wal-Mart Stores (NYSE: WMT) saw its same-store sales grow by 3% in August -- almost double the 1.6% increase analysts were expecting. Reuters wrote that its "net sales in the month, ended August 29, rose 8.7 percent to $30.67 billion." Customers are rewarding Wal-Mart for sticking with its strategy of offering everyday low prices. As the middle class squeeze tightens its grip, investors are anticipating more such growth.

Tuesday night I taught a business school case written in the 1990s on Wal-Mart. The lesson of the case is that Wal-Mart understood that its customers wanted low prices and wide selection so it built a system for getting discounts from suppliers and keeping its shelves stocked with the items customers wanted to buy in each of its stores. But this system stopped working as well through much of the last seven years.

That's partially due to people borrowing against the rising value of their homes to shop at more upscale retailers. In the last year, however, more people have suffered as their incomes declined, the cost of food and fuel has hit record levels, and the value of their homes has plummeted. This middle-class squeeze pushes more and more people back to Wal-Mart since it provides the lowest prices on the items they need to keep their families functioning.

Investors have noticed -- driving its stock up 37% in the last year. As the economy worsens, Wal-Mart investors are likely to benefit -- its stock is up 1.1% in pre-market.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Wal-Mart securities.

Abercrombie & Fitch (NYSE: ANF - option chain) shares are tanking today after the company reported a 7 percent decline in same-store sales in July, much worse than the 1.4 percent decline expected by analysts. Apparently, suburban Moms and Dads decided that $100 jeans were not the correct place to spend their economic stimulus checks. Either that or they were finally turned off by the three-quarters naked models in the store windows. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ANF.

This morning, ANF opened at $52.13. So far today the stock has hit a low of $49.55 and a high of $52.72. As of 12:50, ANF is trading at $49.55, down 6.18 (-11.1%). The chart for ANF looks bearish but S&P gives ANF a positive 5 STARS (out of 5) strong buy ranking.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $65 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 4.2% return in six weeks as long as ANF is below $65 at September expiration. Abercrombie would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.

ANF hasn't been above $65 since late June and has shown resistance around $56 recently. This trade could be risky if the economy stages a rebound, but even if that happens, the position above could be protected by reluctant shoppers who still have lingering worries about their wallets.

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 ANF.

Nordstrom (NYSE: JWN) shares are falling today after the company reported its June same-store sales fell 18.6 percent, hurt by a May sales event that cut into June sales. The numbers fell in line with analysts' estimates, but JWN also warned investors that its second-quarter earnings will likely fall on the low end or slightly below its 65 to 60 cents per-share forecast. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on JWN.

After hitting a one-year high of $53.47 in August, the stock hit a one-year low of $28.00 in January. This morning, JWN opened at $29.75. So far today the stock has hit a low of $27.69 and a high of $30.15. As of 12:10, JWN is trading at $28.90, down 2.34 (-7.5%). The chart for JWN looks neutral but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $35 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 6.4% return in five weeks as long as JWN is below $35 at August expiration. Nordstrom would have to rise by more than 20% before we would start to lose money. Learn more about this type of trade here.

JWN has been above $35 as recently as early June but has shown resistance around $32.50 recently. This trade could be risky if the company's earnings (due out on 8/14) are a positive surprise, but even if that happens, this position could be protected by resistance JWN might find at its 50-day moving average, which is currently around $34 and falling.

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.

Chico's FAS (NYSE: CHS) shares are falling today after the company reported June same-store sales dropped 12.9 percent. While this was a slightly better result than the 14.2 percent drop expected by analysts, investors pushed CHS lower as that kind of a drop is not so good during a period when many consumers were receiving stimulus checks. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on CHS.

After hitting a one-year high of $25.10 last July, the stock hit a one-year low of $4.89 on Monday. This morning, CHS opened at $5.32. So far today the stock has hit a low of $5.10 and a high of $5.45. As of 12:05, CHS is trading at $5.28, down $0.04 (-0.8%). The chart for CHS looks bearish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) hold rating.

For a bearish hedged play on this stock, I would consider a September bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 an 8.7% return in four and a half months as long as CHS is below $7.50 at November expiration. CHS would have to rise by more than 40% before we would start to lose money. Learn more about this type of trade here.

The market is set for a lower open this morning, and one of the stocks that will be contributing to the slow start will be warehouse retailer Costco Wholesale Corp. (NASDAQ: COST) which is currently trading down slightly over 6% in today's pre-market action.

The company announced its fiscal Q1 earnings this morning and was unable to beat analyst estimates, despite an 11% increase in quarterly profit. For the entire quarter the company showed earnings per share of 59 cents, which was in-line with what analysts had been expecting to see going into today's report.

Despite not being able to outpace analyst estimates for earnings, the company had a pretty good quarter overall. If you take a look at revenues, you see a very respectable jump of 12% in the quarter, which is a great increase, but once again, in-line with analyst estimates.