Taking the Macy’s Escalator Up!

Apple is expected to unveil its biggest and most expensive iPhone today at its fall launch event, with most of the buzz swirling around a rumored phablet (iPhone Xs Max?) that’s supposed to boast a 6.5-inch OLED screen. Two other models will likely be called the iPhone Xs (5.8-inch OLED) and Xr (6.1-inch LCD). More products anticipated include the Watch Series 4, third-gen iPad Pro, budget MacBook, and updated AirPods with a long-delayed charging mat. AAPLWealth Strength IndexAAPL is Moderately Flat and trending Up +0.6% premarket.

*Source:  Seeking Alpha

Let’s consider Macy’s Inc. (Ticker: M):

Strategy Discussion

For active traders with a shorter investment time horizon, you can consider a setup utilizing options. Given the market conditions outlined above, taking a passive, premium credit approach may be the best path to success.

Because of the reasons given above, the sale of a credit put spread may be one way to approach this situation.  You want to collect the most premium that you can while staying within your own risk tolerances.  You may want to consider the M September 21st regular monthly expiration 34.5/35.5 put spread, selling it for $0.35.  The most you can gain is the premium collected and the most you can lose is the width of the spread less any premium collected.  Max reward = $0.35 and max risk = $0.65

This means that you are laying odds of 1.86:1.

Given the trading and market environment outlined above, a trader must evaluate whether this reward/risk ratio is appropriate for his/her risk tolerance.