Goldman Sachs Suggests Buying Straddles on Nordstrom (JWN)

Goldman Sachs is out with a research note this morning, where it suggests that traders buy straddles on Nordstrom Inc. JWN ahead of earnings. The GS analysts noted that JWN shares have a history of strong volatility on same-store-sales (+/-4.5%) and earnings (+/- 5%), but February straddles that include both of these events only cost 6.8%. The analysts believe JWN options have been pressured because JWN shares have traded in a tight range over the past three months and thus recommend buying straddles to benefit from volatility in either direction. The analysts recommend buying the February $42.00 straddle for $2.78. Nordstrom, Inc. is a fashion specialty retailer. As of March 19, 2010, the company operated 187 stores located in 28 states in the United States. The company operates in four segments: Retail Stores, Direct, Credit and Other.