3 Retail Stocks Getting Crushed and the Long-Dated Options Trade on Each One

Key Points

• TJX Companies has fallen roughly 20% in under a month despite strong earnings, with relative strength readings near rare oversold extremes.
• Andrew Keene is using January 2028 call options on TJX Companies and Burlington Stores to cut daily time decay to less than a penny.
• Premium brands, including On Holding and Nike, are sliding alongside off-price retailers, pointing to a consumer squeeze rather than company-specific problems.

Retail is getting hit hard, and the charts look a lot worse than the businesses behind them.

TJX Companies NYSE: TJX is down roughly 20% in under a month and about 25% across the past 90 days, and that slide followed a strong earnings report. Burlington Stores NYSE: BURL and Dick's Sporting Goods NYSE: DKS look nearly identical on the chart.

Andrew Keene, president and CEO of AlphaShark Trading and a former Chicago Board Options Exchange floor trader, sees a correlation rather than a collapse. As oil prices climb, discretionary income tightens, and traders sell retail as a clean proxy for shorting the consumer. The group falls together, whether or not any individual company earned it.

His response isn't a quick trade. It's a set of long-dated call options sized small enough to sit through a lot of pain.

Low Volatility Pushed This Trader Out to 2028 Expirations

Keene compares owning an option to carrying car insurance. You pay for it every day, whether or not you use it. Options bleed value fastest inside 90 days, and with the volatility index in the mid-teens, he says short-dated calls and puts stopped working for him.

So he changed what he trades. He now looks at nothing shorter than four months out, and several current positions run to January 2028. On a call bought around $2.20 with roughly 500 days left, the daily decay works out to less than a penny.

He screens on average true range (ATR), the typical distance a stock covers between its high and low in a session. A wider range means more chances for an option to move. He pairs that with the relative strength index (RSI), where a reading below 30 is considered oversold and below 20 is considered genuinely unusual.

TJX Companies Is Trading Near an 18 RSI

TJX sits around $127 with an ATR near $3 and an RSI around 18.8. Keene estimates fewer than six optionable stocks in the entire market are that stretched. His position is the Jan. 21, 2028 $190 calls, bought near $2.35 and recently closer to $2.20. He plans to add around $1.50 and again near 75 cents if shares keep sliding. Earnings are already behind the stock, which removes one near-term variable.

For readers who'd rather own shares than contracts, he sketched the stock version: entry near $126, stop around $110, first target near $133, and a second near $140, with the stop moved to breakeven once the first target hits.

The math behind his preference is simple. One contract runs about $235 and controls 100 shares. Buying those shares outright costs roughly $12,000.

Burlington Stores Has the Widest Daily Range on His Book

Burlington is the name Keene likes most, largely because it moves the most. Its ATR runs near $12 a day, the widest of roughly 50 positions he currently holds.

He bought two January 2028 $480 calls at $6.80, about $1,300 of risk, with a target of $9.

He doesn't expect the stock, near $238, to reach $480. That isn't the bet.

A recovery of $60 or $70 could be enough for the option to work, and he plans to add at $4 and again at $2, capping exposure near $5,000.

Dick's Sporting Goods Offers the Cleanest Chart of the 3

Dick's is the shortest-dated position at June 2027, roughly nine months out. Shares got hit on earnings, though an RSI near 28 is only modestly oversold rather than extreme. The $8 ATR is what drew him in. He owns two $200 calls bought around $5.70, with bids resting at $3.50 and $1.50 to add.

The chart has already turned: shares bottomed near $120 and have recovered to about $133. Keene exits these positions 90 days before expiration to sidestep the steepest decay. He's also holding 2028 calls in On Holding NYSE: ONON, a premium brand that also got punished on earnings, and watching NIKE NYSE: NKE without a position yet.

What Could Go Wrong With These Oversold Retail Stocks

A low RSI isn't a buy signal on its own. Keene has back-tested it, and an 18 can grind toward 15 while the stock drifts. Slow declines barely move the indicator at all.

Bankruptcy looks like a remote risk for companies this size with real revenue and profitability, but the honest answer is position sizing rather than prediction. Keene has roughly $5,000 allocated per idea against a $175,000 account, and he only buys options rather than selling them naked, so the maximum loss is the premium paid. He trades his own money alongside everything he publishes.

The upside case: oil cools, discretionary spending stabilizes, and buyers step into companies that never stopped earning. The risk: the consumer keeps weakening and these charts spend another year going sideways.

Watch oil, not the retail tape. That's the input that moves this group.

Want to see the trades as they are placed? Get Andrew Keene's weekly options trade alerts at OptionHacker.