Option Trade 
Urban Outfitters, Inc. (NASDAQ:URBN) Calls 
Monday, March 07, 2016

**OPTION TRADE: Buy the URBN Sep 2016 30.000 call (URBN160916C00030000) at approximately $2.05. Place a pre-determined sell at $4.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

by Ian Harvey

March 07, 2016

Urban Outfitters, Inc. (NASDAQ: URBN), a lifestyle retail business, is scheduled to release its fourth-quarter numbers after the market closes today, March 7th. Analysts forecast earnings of $0.56 per share, down from $0.60 during the same period last year.

URBN shares have been trending higher, and the stock has been one of the better performing stocks in the overall market so far this year. Even with the solid gains the stock has enjoyed thus far in the year, the valuation remains attractive, with a P/E of just 15.3.

The stock has a mixed record when it comes to earnings reports, but last quarter its number were in-line with the consensus, and better than expected two quarters ago.

Also, Urban Outfitters is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings-with the most up-to-date information possible-is a pretty good indicator of some favorable trends underneath the surface for URBN in this report.

Urban Outfitters has benefited from new store openings, an increase in direct penetration, growing wholesale operations, eCommerce activities and merchandising improvements. These initiatives may favorably impact results in the quarter to be reported. We also believe that better product execution and effective inventory management will help augment the company's performance.

The stock has been a top performer in 2016, with shares appreciating 21.0% on the year.

Harvey’s Options Volatility Indicator


Multiple competitors have already reported, with Abercrombie & Fitch (ANF) recently topping estimates and rising to a new 52-week high. The Gap (GPS) reported toward the end of February, posting earnings in-line with the consensus, which was enough to push that stock higher. Therefore, expect Urban Outfitters to follow suit and report solid quarterly numbers. A decent report is expected, and given the stock's current valuation a decent amount of upside following the announcement is likely to occur.

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

**OPTION TRADE: Buy the URBN Sep 2016 30.000 call (URBN160916C00030000) at approximately $2.05. Place a pre-determined sell at $4.20.

Note: No protective stop losses added -- but if you wish to do so make it $0.80.

”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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