Since 1981, Bernie Schaeffer has been a leading expert in technical analysis, market sentiment and options trading; in his The Options Advisor, he reviews two bullish strategies for owning retailing stocks.

Apparel retailer Kohl's (KSS) has been trending higher on the charts of late. The equity has recently found support from its 50-day moving average, which coincides with an area that's five times its April 2020 closing low.

Despite adding more than 43% since the beginning of 2021 and sporting a whopping 279% year-over-year lead, there's enough pessimistic sentiment that could unwind and push KSS higher this summer.

kss

Sentiment among the brokerage bunch is lukewarm at best. Of the 11 analysts in coverage, five still consider Kohl’s stock a "hold" or worse, leaving plenty of room for upgrades going forward.

Meanwhile, shorts are already in covering mode, down 3.5% over the past two reporting periods yet the 11.38 million shares sold short still make up a healthy 7.8% of the stock’s available float. Finally, the equity’s SVS sits at 70 out of 100, indicating KSS has exceeded volatility expectation during the past year.

RECOMMENDATION: Buy the Kohl's July 16, 2021 55-strike call.

Retail staple American Eagle Outfitters (AEO) enjoyed a post-earnings bull gap back on March 3, coupled with news that the company would be reinstating its buyback program.

aeo

Since then, headlines surrounding American Eagle have been generally upbeat, including the company lifting its first-quarter guidance. This has helped the equity eclipse its previous all-time high of $34.80, touched back in 2007.

Short sellers have started to hit the exits, but there’s still plenty of pessimism to be unwound, which could push AEO even higher. The 16.33 million shares sold short make up a solid 10.8% of the stock’s available float, and it would take nearly four days to cover these bearish bets at the stock’s average daily pace of trading.

RECOMMENDATION: Sell the American Eagle May 21, 2021 33-strike put.

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