"Home Depot is actually relatively stronger than the RTH ETF and you can see through 2010, 2011, 2012 all the way up to 2017 that was in fact the case. Since 2017 into 2018 we've seen a little bit of a pullback in the ratio, but what you're seeing is we're starting to come back towards resistance, and should Home Depot break to new highs, you might actually see that relative strength move higher," said Gordon.
"That's actually quite impressive that Home Depot, with the stay-at-home economy, could be showing such good relative strength to this ETF," said Gordon. If an investor wants to hold the stock without laying out a lot of capital, Gordon recommends a stock replacement strategy using July options.of around 70 if you're inclined to do the option trade. So the July monthly 220 strike calls have a delta of 71 — basically what that means is if the stock moves higher by $1, your options … will go up 70 cents," said Gordon.
He says if an investor were to buy 100 calls for roughly $24, they could then hold a position in Home Depot without spending the full amount per share. "That's a way to control 100 shares with a much smaller amount of capital. Instead of putting up $23,800, you can go up and put $2400 of capital to control 100 shares of Home Depot if you'd like to do it in the options market," he said.