Nov. 4 (Bloomberg) -- Investors should buy bullish options on Gap Inc. and Macy’s Inc. because the retailers may advance after reporting greater-than-estimated sales tomorrow, Goldman Sachs Group Inc. said.

Gap, operator of the Old Navy and Banana Republic chains, may beat projections for revenue at U.S. stores open at least a year and raise its third-quarter profit forecast, derivatives strategists Stuart Kaiser and Maria Grant wrote. Macy’s may rise because of cost cutting and sales that top forecasts due to “cooler weather and pent-up apparel demand,” they said.

Goldman recommended buying San Francisco-based Gap’s November $22 calls, which break even if the shares add about 4.3 percent. Those contracts added 29 percent to 97 cents today, while the shares climbed 0.7 percent to $22.09.

The New York-based strategists advised buying the November $19 calls on Macy’s, based in Cincinnati. The second-biggest department-store chain slipped 0.9 percent to $17.61, while the November $19 calls dropped 10 percent to 45 cents.

This month’s U.S. stock options expire Nov. 20.

Gap is projected to post October sales gains of 1.5 percent, the average of analysts’ estimates compiled by Retail Metrics Inc. in Swampscott, Massachusetts. Macy’s is anticipated to report a decline of 2.5 percent.

The strategists cited Goldman retail analyst Michelle Tan, who estimates Gap will report a 3 percent increase in sales from a year earlier because of promotions, including a four-day sale at Gap and in-store coupons at Old Navy and Banana Republic. Tan has rated the shares “neutral” since downgrading them June 4. Since then, the stock has added 30 percent.

Macy’s sales may improve from last month “given easing comparisons, accommodating weather and pent-up demand for apparel,” the report said, citing Goldman retail analyst Adrianne Shapira. She has rated Macy’s “buy” since March 6. Since then it soared 154 percent, compared with 53 percent for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.

Last Updated: November 4, 2009 16:51 EST