Trade Breakdown: Top Play for the Second Half of 2021
Yesterday afternoon, I went LIVE for the official Profit Takeover launch to explain my Three Steps to Taking Over Wall Street.
Thank you so much to all who attended — WOW!
For those of you who missed it, you can watch the replay right here.
Plus, I’ll be diving deeper into my Favorite Trade for the 2nd Half of 2021 for you below… including an E-LETTER EXCLUSIVE CATALYST that could send the shares soaring!
But first, I have to say — I’m so happy to have you on my brand-spanking-new Profit Takeover team.
In this space, I intend to deliver all the education, strategies, and trading secrets you need to put real money in your account. I’ll be coming straight to your inbox, so be sure to keep an eye out.
Also, I want to address as many of your questions as possible, so be sure to Ask Me Anything right here, and I’ll collect some each week to answer!
Seriously — ask me anything, no matter your level of trading knowledge.
I don’t cater to only seasoned options traders — I want to put the power in the hands of ALL the people, including the new kids on the options block.
That’s why, each week I plan to deliver snippets of options education directly to your inbox. Some will be basic, rudimentary lessons and concepts; others will be for more advanced traders.
Whichever category YOU fall under, after spending 10 years as a market maker, I’m here for you — so ask away!
You can also follow my portfolio right here, and I’ll be giving you regular, actionable trade ideas each week, as well as offering insight into the unusual option activity I’m spying on the trading floor, and outlining my personal process for selecting and managing trades.
That said, let’s dive right into my Favorite Trade for the 2nd Half of 2021…
I want to show you exactly what I’m looking at, and why this trade has the potential to be what we call a “10-bagger.”
Like I said yesterday — volatility is becoming permanent, thanks to an influx of fresh retail traders.
For the first time, Wall Street isn’t controlling the markets — it’s the folks like you and a lot of the Robinhood-type crowd.
This has helped to transform the way options are priced… meaning there are plenty of opportunities to pick up relatively inexpensive options and generate massively asymmetrical profits.
Against this backdrop, I really like Nordstrom (NYSE:JWN) as a long trade for the second half of the year, and I’ll tell you why again right now.
To start, Nordstrom already generates the third-most sales among U.S. department stores, doing more than $10 billion in 2020.
Courtesy of Statista
Meanwhile, the high-end retailer is second to only Costco in consumer satisfaction in the U.S., scoring an 80 out of 100 on an ACSI index — above the average score of 75.
Courtesy of ACSI.org
To boot, my wife just happens to run a fashion blog, and she has her finger on the pulse of upscale shopping trends — which look very promising for Nordstrom.
So, the fundamentals already look solid.
Looking ahead, the high-end fashion industry is expected to flourish over the next few years, and be worth $84 billion by 2025, so the future is also bright.
I also like the department store as a possible pandemic-recovery play, as many adults I know are clamoring to get dolled up in new duds and attend a wedding, charity gala, or other formal event, after being cooped up in the house for the past year.
And one company — Nordstrom — is seeing an unprecedented influx of cash…
But one other reason JWN is on my radar, and something I didn’t discuss much yesterday, is buyout speculation.
There’s been chatter here and there about Amazon.com Inc. (NASDAQ:AMZN) potentially circling the Nordstrom wagons, but the real front-runners with deep pockets are likely the Nordstrom heirs themselves.
The Nordstrom family has twice attempted to take control of the retail giant in recent years, including a $50-per-share offer to take the company private, which was ultimately rejected by independent directors.
However, the sweetheart number circling the Street is $60 per share — a level that’s roughly in line with JWN stock’s late-2018 highs…
Weekly chart of JWN – courtesy of StockCharts
If the latest M&A buzz turns out to be true, a $60-per-share bid would more than likely send JWN soaring to that price like it’s a magnet…
So the stock’s prospects, as well as the option’s favorable IV setup, means I’m a buyer of the JWN January 2022 $40-strike call options, for about $6.50.
Watch me talk JWN at the 09:35 marker
Of course, it should be noted that stocks and options are living, breathing entities, so if you don’t see the same prices I do, it’s because they’re fluid.
While I may see an option priced at $2.01 at 10 a.m. ET, by 10:05 a.m. ET, that same option could be priced at $1.90 or even $10, depending how the underlying stock is moving.
You should always use your own best judgement and NEVER blindly follow a trade — this is your money at risk, after all.
That said, a move to $60 would mean my $40-strike calls would have $20 in intrinsic value — which is the difference between the in-the-money call strike ($40) and the underlying stock price ($60).
And if an offer happens well before the New Year, or if JWN shares get to $60 without it — and I wouldn’t be surprised to see a spike by July — those long-term options will ALSO have plenty of TIME VALUE baked in, meaning they should be worth even MORE than $40 on a rocket above $60.
I’ll be checking in on that trade, as well as the others, in this space and right here in my portfolio.
Stay tuned — and be sure to check your inbox for more red-hot trade ideas, options education, and insight into that Wall Street impact money, coming soon.
Talk to you soon!
April 28 2021
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