Option Trade 
L Brands Inc (NYSE:LB) Calls
Tuesday, November 17, 2015

**OPTION TRADE: Buy the LB Feb 2016 95.000 call (LB160219C00095000) at approximately $3.30. Place a pre-determined sell at $6.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.30.

by Ian Harvey

November 17, 2015

L Brands Inc (NYSE: LB), a specialty retailer of women’s intimate and other apparel, beauty and personal care products and accessories, is slated to report third-quarter fiscal 2015 results on Nov 18. It is expected that the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. In the trailing four quarters, the company outperformed the Consensus Estimate by an average of 4%.

L Brands commands a market-leading position in the lingerie, personal care and beauty segments. The company’s innovations in merchandise and exclusive assortments remain popular among consumers, thereby setting it apart from peers. L Brands recently raised its earnings projection for third-quarter fiscal 2015. The company now expects earnings per share in the range of 51–53 cents, up from 40–45 cents expected earlier as well as the prior-year figure of 44 cents.

L Brands, Inc. is up 15.56% in the last 3-month period. Year-to-Date the stock performance stands at 11.78%. L Brands, Inc. lost 6.15% in the five trading days last week but managed to gain 0.97% yesterday, but has dropped 2.5% in the last 4 weeks.

Historically, L Brands Incorporated has been trading with a 52 week low of 75.11 and a 52 week of high 101.11. Technical indicators show a 50 day moving average of 94.89.

As of the latest quarter end, besides having 990 stores in the U.S., the company had 98 Bath and Body Works stores in Canada, 9 Pink Stores in Canada, and 37 Victoria's Secret stores. They also had 12 Victoria's Secret stores in the UK as well as 2 Pink stores. The company highlights that it added 64 new stores in the international segment between Victoria's Secret and Bath and Body works year to date, a 16% growth rate.

The international business will continue to add more earnings power and grow earnings incrementally over the next several years - there is no contesting that theme. However, it is the domestic business that generates the bulk of the earnings. In fiscal 2015, same-store comps accelerated to 6% in the first quarter and a strong 11% in the last quarter, with the market expecting that trend to continue ending the year at +8.2%.

L Brands, Inc. should head towards $100.12 per share according to 17 Analysts in consensus, with a high price estimate target of $115.

Also, 6 analysts have added LB in their list of strong buys. 1 stock expert has also rated a buy. 17 broker firms have advised hold.

Many analysts have commented on the company rating, with Barclays initiating coverage on L Brands, Inc. with an Equal-weight rating on the shares of the company just recently.

Harvey’s Options Volatility Indicator


Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the LB Feb 2016 95.000 call (LB160219C00095000) at approximately $3.30. Place a pre-determined sell at $6.00.

Note: No protective stop losses added -- but if you wish to do so make it $1.30.

”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.

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