One of my favorite trading ploys is to double dip on a stock that is beaten down for no good reason. Such is the case with Macy’s (NYSE: M), which we closed out earlier this month for a nice profit.

My concern then was that the stock market might punish Macy’s unfairly this week, which is exactly what happened. Despite reporting strong Q3 results yesterday that included an earnings beat and a guidance upgrade, shares of Macy’s have dropped more than 10% over the past two days.

The culprit was store closings, which boosts bottom-line profits but reduces top-line revenue at the same time. Apparently, a lot of people on Wall Street believe it is better to sells goods at a loss than to not sell them at all.

I disagree with that sentiment. In the race to capture market share, too many companies get trapped in the “growth at any cost” mindset to leads to a suboptimal allocation of resources.

Combined with the overall decline in the stock market, I believe Macy’s is oversold and likely to rebound once cooler heads prevail. I don’t expect that to take long once holiday sales figures start getting reported, so I am going to take advantage of this brief window opportunity to sell another short put on Macy’s.

As of this morning, we could sell the $30 put expiring on February 15 for at least $1.75. That works out to a return on capital-at-risk of 5.8% over 92 days, or 23.1% on an annualized basis.

Regardless of how many contracts you sell, it’s absolutely critical that you follow the instructions below, particularly when it comes to setting the limit order.

How to Make the Trade:

• Trade: Sell to open the February 15, 2019, $30 put option on Macy’s (NYSE: M).
• Symbol: M190215P00030000
• Limit Order Price: a credit of $1.75 or more.

Tell your broker: “I want to sell a put on Macy’s stock. Specifically, I want to ‘sell to open’ one $30 Put that expires on February 15 for a credit of $1.75 per share or more.”

Note: Sell one put for every 100 shares of Macy’s stock you would be pleased to buy at $30 per share. Investors should set aside $3,000 per contract sold to buy the stock in case the option expires in the money.

Further Instructions Regarding the Trade:

• • If the option price changes, you can adjust our recommended limit based on the midpoint of the bid/ask spread, which you should be able to see when entering the trade. Just make sure the potential credit is at least equal to the Limit Order Price specified above.
  • Place your limit order on a “good ’til canceled” (GTC) basis and be patient.