Schaeffer's Trading Floor Blog
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Stocks are off to the races in the third quarter, with the S&P 500 Index (SPX) surging to a new record high in the wake of well-received manufacturing data. Meanwhile, among the equities in focus are retailers Urban Outfitters, Inc. (NASDAQ:URBN) and Dick's Sporting Goods Inc (NYSE:DKS), as well as Chinese online sales concern JD.Com Inc (ADR) (NASDAQ:JD), which have all attracted analyst attention.

  • URBN is sitting out the rally, down 1.5% at $33.34, after Wedbush downgraded the stock to "neutral" from "outperform," and slashed its price target to $37 from $46. "Incremental promotions -- even if minor -- suggest the potential for a modest slowdown" in sales for URBN's Anthropologie business, the analysts opined. While negative analyst attention is relatively rare for URBN -- the stock sports 16 "buy" or better ratings, compared to nine "holds" and no "sells" -- options traders are already in the bearish camp. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 1.22 stands just 2 percentage points from a 52-week peak, pointing to a healthier-than-usual appetite for long puts over calls in recent weeks. As a result, Urban Outfitters, Inc. sports a Schaeffer's put/call open interest ratio (SOIR) of 1.01 -- higher than 98% of all other readings from the past year. In other words, near-term option traders have rarely been more put-heavy during the past year.

  • DKS is 1.8% higher at $47.42, after UBS said the company is well-positioned to profit from the World Cup hype. Furthermore, the brokerage firm reiterated its "buy" rating and $53 price target on Dick's Sporting Goods Inc. The nod marks a change of pace for DKS, as 12 out of 21 analysts maintain tepid "hold" ratings, and the consensus 12-month price target is $51.69 -- a premium of just 9% to the stock's current price. In the options pits, on the other hand, speculators have grown increasingly bullish toward DKS, despite the stock's year-to-date deficit of more than 18%. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio stands at a lofty 7.84 -- just 5 percentage points from an annual high.

  • Finally, stronger-than-expected Chinese manufacturing data, as well as the end of the so-called "quiet period" for the Wall Street freshman, has resulted in a gain of 4.7% for JD. The stock was last seen flirting with $29.86, and earlier tagged a post-IPO high of $31.22, after a slew of analysts weighed in with bullish opinions. Jefferies and SunTrust Robinson initiated coverage with "buy" ratings, and Barclays launched coverage with an "overweight" recommendation. Elsewhere on Wall Street, short interest on JD.Com Inc (ADR) jumped nearly 30% during the most recent reporting period -- and some of those shorts may have (perhaps wisely) picked up options hedges. On the ISE, CBOE, and PHLX, JD calls have outnumbered puts by a 6-to-1 margin during the past two weeks.

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