Zeroing In on Retail

Restoration Hardware (RH) is one of the few retailers I enjoy holding. But, I'll tell you what, I hate trading this thing. Looking at the chart has me a bit nervous heading into earnings next week.

In fact, the chart looks setup for a great price volatility type of trade. In other words, it looks as though there could be a big move ahead, but options just aren't making the risk-reward ratio worth pursuing. It isn't what they are priced, but how they are priced. The spreads and liquidity are making this one too tough to try and play outside of a simple hedge. For instance, the September $70 straddle is bit around $6.90, but asking $7.90. It's one thing if a spread is 15% or 20%, because the option is $0.20 by $0.25 or $0.30 by $0.35 -- but when that 15% starts to equal $0.50 or $1, I take a pause....360 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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