Nordstrom is close to its all time support (back from 1985). ^^^

27 de out. de 2020

Nordstrom's been hit really hard - and rightfully so. It's a department store in the era of specialized stores. As a sector, department stores are commodity brands with minimal appeal. That said, out of all the department stores, there's really only one store that has made a brand for itself - Nordstrom. Of all the stores out there, I believe it has the least chance of going under. The Nordstrom family in the past has tried to repurchase the company and take it private. At the time, their bid was too low. Today, any bid is almost a steal.

But.. look back at every major recession in our history. JWN has hit this bottom support line. And what happens soon after that, a dramatic rise. The biggest difference between today and 2008, the last time JWN hit the support line is that in 2008, you could still physically go to the store + you had a need for dressing nicely. Today, most people are wearing lounge / comfort clothes, and even if they wanted to go out, most people can't or won't go indoors due to COVID-19.

You can assume that JWN has a high chance of going bankrupt.
You can also assume that if it doesn't (protect your downside), then based on history, it will climb.

Those who have still have any discretionary money available to them will be looking to spend as soon as they can - whether its due to COVID-19 fatigue or a COVID-19 vaccine.

The idea here is something similar to a strangle.
- Put options around $7.50 that expire before May of 2021. COVID will likely lock people in until spring of 2021. This is going to be the riskiest time for JWN - especially since they will likely lose a lot of holiday revenue.

- Call options around anywhere between $15-$30 that expire end of 2021. If JWN makes it past Spring of 2021, then they should be resilient enough to enjoy a return of customers (assuming there's not another massive event).