We don't have to tell you that this has been such a crazy year for stocks. It's making this Black Friday and holiday sales season an even bigger deal too.
And you can make a quick and tidy profit by trading the best options on the stocks that will move the most this holiday shopping season.
This could be a make-or-break event for retailers who've struggled to get foot traffic since the pandemic started earlier this year. With more people shopping online and buying different things than normal, retailers are pulling out all the stops to get sales, including week-long discounts and online deals.
We expect to see retail stocks swing more this year as the winners and losers shake out. That's the perfect environment to trade options.
Black Friday itself, which used to happen the Friday after Thanksgiving, already started last week. And we can expect week after week of similar deals, all designed to lure back shell-shocked customers before Christmas.
That's why we've asked Money Morning Quantitative Specialist Chris Johnson to share his research on which stocks are going to gain the most from this year's shopping season.
We'll show you what Chris found, including the one retail stock to trade options on right now...
The Best Stocks to Trade Right Now
Chris has been looking at retail stock charts and other data, and one thing has become rather clear: Given the performance of retail stocks, the only conclusion is that you can't keep teen consumers out of the game.
While the pandemic has taken a hard toll on companies like Nordstrom Inc. (NYSE: JWN) and Macy's Inc. (NYSE: M), Chris can see that retailers focusing on younger clientele have been faring better.
And they have been doing so since Labor Day.
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The list of stronger performers includes companies like Children's Place Inc. (NASDAQ: PLCE), Abercrombie & Fitch (NYSE: ANF), America Eagle Outfitters Inc. (NYSE: AEO) and Buckle Inc. (NYSE: BKE). They are all knocking it out of the park during the seasonally strong period starting in September. "Two of these stocks," Chris mentioned, "remain high on my Best in Breed scoring system, signaling that a strong year-end rally is ready to unfold."
It's no wonder when the SPDR S&P Retail ETF (NYSEArca: XRT) has doubled since bottoming last March, easily outperforming the S&P 500 itself.
One stock Chris really likes is an online specialty retailer, and you would think that the sweatpants wearing, work-at-home crowd would be a contraindication. He is talking about casual clothing outfitter Stitch Fix Inc. (NASDAQ: SFIX), which pairs customers with their own personal shopper, and it has been a great story this year.
Along with Etsy Inc. (NASDAQ: ETSY) and Farfetch Ltd. (NYSE: FTCH), Stitch Fix has been part of a trinity of online retailers that have averaged gains of 45% since Labor Day. That's a return that is almost four times better than the retail sector's return of 12%.
Stitch Fix's shares are locked in a bullish technical trend as the stock is trading above its rising 50-day moving average. Not only that, but shares are close to breaking out to the upside from a consolidation in place over the last few weeks between $34 and $38.
The fuel for that breakout includes a load of short positions that will start getting squeezed as the stock breaks through $40. "That short squeeze along with the strong technicals will target a price north of $50 by year-end," Chris added.
All that's needed is a catalyst to get things rolling, and one's on the horizon.
Stitch Fix will announce its quarterly earnings on Dec. 7. Looking at the charts, traders have been grabbing the stock ahead of these reports as they "buy the rumor." That action is likely to make the shorts nervous, which could cause them to start buying the stock to close their short positions. Shares of Stitch Fix rallied almost 25% in the weeks leading up to their last earnings report. Watch for a repeat as we head toward Dec. 8.
Traders can take advantage of this potential burst by trading call options.
Look for a call on SFIX with a strike price near $50 and an expiration about three to six months out. That will give you a cheaper entry price and give the trade time to work as SFIX has a solid shopping season and earnings report.
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