Jim Strugger's Ross Stores Hedge Ahead Of Earnings

Jim Strugger of MKM Holdings spoke on Bloomberg Markets about an options strategy in Ross Stores, Inc. ROST ahead of the earnings.

The company is going to report earnings on Thursday after the closing bell and Strugger suggested investors with a long stock position should sell the September 65 call and buy the September 57.50 put. The trade offers protection below $57.50 or 7.7 percent lower and it caps gains at $65 or 4.3 percent higher from the current market price.

Strugger likes the stock in the long term, but he said it had execution issues in the first quarter, which should, in his opinion, continue in the second quarter. In the short term, he sees limited upside and he wants to manage downside risk with options.