After years of alpha, one investor apparently thinks that the
limelight is fading for TJX.
Riding a wave of frugality that swept the nation after the 2008
market crash, the discount retailer consistently outperformed the
broader market between early 2009 and mid-2012. It more than
quadrupled over that time, while the S&P 500 appreciated 56
percent. But in the last six months it's gone nowhere while other
stocks have continued to advance.
Friday's big option trade is looking for that lackluster
performance to continue. An investor sold about 28,000 March 45
calls for $1.05, while buying a similar number of February 45 calls
for $0.25. Volume was below open interest in the February
contracts, which suggests that an existing short position was
rolled forward in time.
He or she apparently thinks TJX will remain at or below $45 and has
likely been selling calls at that level to earn income while
holding a long stock position
. The trade was giant in size--pushing total option volume to 21
times greater than average--and marks a huge sentiment shift in a
stock that once could do no wrong in the eyes of investors. (See
analysis tool shows a similar pattern in other discount retailers,
which have badly lagged the S&P 500 over the last three months.
At the same time, leadership has shifted to energy, financials and
TJX closed at $45.01 on Friday, down 0.44 percent.