TIF – Trade Idea

Tiffany & Company ($TIF)

Judging from the volumes on the October contracts for $TIF it looks like there were two relatively large Bear Spreads open.

There’s a 70/62.50 and a 65/55.

I like the 65/55 spread, and the 6 month chart below will give you an idea why.

The trade will cost you about ~$1.85 and the max profit if $TIF closes under 55 would be ~$8.00.

Both of these might be hedges against a long stock position, but I still like this trade. The headline risk which Tiffany faces at the moment, will be any weak news on upscale consumer spending. That seems more and more likely to me, especially if we’re going to tax the rich… The other element which I find curious is the extreme divergence with Nordstrom ($JWN) today. ($JWN up 4%, while $TIF is down (2.3%), this is uncommon. Look at the divergence today on the 5 day chart.