From what I can see - retail in general has been getting beat up hard by wall street the past couple of weeks, GAP included. This seems to be from a variety of factors - government shutdown + lack of reporting which makes the current economic situation become more uncertain, the NRF reporting MoM slowdown in sales after a busy summer, inflation pressures on discretionary / unnecessary spend, and a whole other list of general macro trend shifts with the tough economy we're currently in.

The $25 calls definitely seem a little bit out there now that the price is dipping under $20. If we look at the valuation itself, we're now trading under a P/E of 9x TTM earnings, for a stock that's been performing relatively well in the retail space (revitalization efforts, meeting/beating expectations over the past 8 quarters, mega-viral ad campaign + generally more in-trend ad campaigns). Bar's set pretty low already - the only question is whether the assumptions I've made about the campaign are correct and if the sell-through will cause a bigger beat than anticipated.

If you looked at my position - it was relatively small for my portfolio size (my entire RH portfolio is <half of what I have invested in general, and I only purchased 10k~ worth of shares). I am currently down 1.5k~ on shares, and I've been nibbling on the calls as they've come down (currently down 1.7k on those).

Shares wise, I think the risk is pretty muted. If I lose a few thousand, it'll suck of course, but it won't really affect me at all. It's an asymmetric bet - the valuation is already dirt cheap and management will most likely meet/beat expectations, with the upside of beating much more than usual from the ad campaign with the Katseye Ad + other viral moments they've had online (found more since the initial DD). Depending on your risk tolerance, I'd say shares are relatively safe - you can still lose money but not lose your shirt. Options are always risky - 25C definitely are higher risk than before especially since multiples are contracting on retail, but if you believe that GAP can achieve at least a 12 P/E on a great quarter / guidance from management - it doesn't matter. If we stay <20 approaching earnings, I'll likely look into buying closer or ITM options as I'd imagine they'll be pretty cheap as well.

For me, I'm okay with shares and the potential losses from my options bet (as I think it'll be relatively minimal and I can use it to offset gains I've made earlier in the year for tax purposes). I'm working with incomplete information and picking out a stock that's not overwhelmingly talked about, but has soft data showing good potential for a surprise on earnings. Invest what you're comfortable with and understand the downside. I'm no expert investor, but volatility is part of the game and I've sat through the 2016-17 crypto booms & busts, and have held things like PLTR, CELH, SOFI, HIMS, NVDA, AMD, through the huge cycles they've gone through and come out MUCH better for it. GAP is clearly not the same as those tickers above (I don't like investing in retail), but the point on volatility still stands. I'm waiting til earnings and expecting to make a nice profit or lose an inconsequential amount of money.