Jim Strugger's L Brands Trade

Jim Strugger, a derivatives strategist at MKM Holdings, spoke on Bloomberg Markets about a bearish options strategy in L Brands Inc LB.

The company is going to report the same-store-sales on Thursday and Strugger isn't very optimistic. He is concerned about pretty slow store traffic and excessive promotional activity, which could be indicative about retail space in the earnings season. Strugger believes that promotional activity could hit margins of L Brands and it might have to guide down its Q3 earnings.

He wants to take a short position and buy the November 67.50/60 put spread for $1.60. The trade breaks even at $65.90 or 6.55 percent lower. Maximal profit for the trade is $5.90 and it can be achieved if the stock drops to $60 or lower. Strugger added that traders with a long stock position should buy the put spread and sell the November 75 call.

Update: L Brands Reports Sept. 2016 Sales Of $971.4M An Increase Of 6% YoY