I’m about to triple my money on this retail stock: Trader

Some of retail's biggest names are set to report earnings next week, and one trader is looking ahead to trade one stock in particular.

Andrew Keene of AlphaShark believes that TJX is set to surge, based on options activity he's witnessed.

"We saw institutional order flow in the options market on the odd-82.5 calls," he said Friday on CNBC's "Trading Nation." "That means somebody thinks the stock can possibly get above that $82.50 level."

The retailer has been touted as one of the year's best-performing companies in the industry, even while other big names suffered. TJX is currently up 15 percent this year, and based on the charts, Keene sees the climb continuing.

Looking at a daily chart of TJX, Keene points out that every time the stock has pulled back close to its 50- or 100-day moving average, buying activity increased to drive the stock back up.

But TJX's weekly chart is even more promising, showing an upward momentum since the beginning of the year.

"This is as clear of a bull channel as you can get," said Keene.


How high can TJX go? Keene is betting that the stock can hit $85.

"Knowing that earnings are coming up, knowing that institutional order flow in the options market leads me to believe that TJX can get up to $85, I think it's going to bust through the $82 level," he said. "That's going to act as new support going forward."

Keene is going to buy the August 82.5-strike calls and sell the August 85-strike calls for 80 cents per share. If TJX indeed rises to $85, each spread purchased for 80 cents will be worth $2.50, meaning Keene would more than triple his money.

TJX Companies is set to report earnings on Aug.16. Overall, Keene predicts a solid earnings quarter for the retail industry.

"I think a lot of the retail names, despite Kate Spade having poor earnings, are moving higher. ROST [Ross Stores] is another one we see institutional order flow," he said. "I think [TJX will trade at] $85 by August expiration and I think earnings are going to be a catalyst."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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