Schaeffer's Trading Floor Blog
Stocks quoted in this article:

Following a slightly positive morning half of the session, stocks have edged below the breakeven mark this afternoon. Among the equities in focus are athletic apparel maker Lululemon Athletica inc. (NASDAQ:LULU), healthcare services provider UnitedHealth Group Inc. (NYSE:UNH), and payments technology company Visa Inc (NYSE:V).

  • LULU has had an impressive run on the charts as of late, climbing 26.65% during the past year to its current perch of $82.05. Moreover, the stock reached a new record peak of $82.48 on June 4, leading Buckingham Research to raise its 12-month price target estimate to $62 from $51. Still, this price change represents a 24.4% discount to the aforementioned perch, meaning the analyst still expects Lululemon Athletica inc. to underperform. Likewise, bearish sentiment toward the stock seems to lurk among traders, as well. In fact, short interest accounts for 17.5% of the stock's float, indicating a heavy level of pessimism. On the flip side, LULU's International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 10-day call/put volume ratio of 1.33 ranks higher than 79% of other such readings taken during the past year, signifying traders have bought to open more calls over puts at a faster-than-usual pace within the last two weeks. Call buying and short selling rising in tandem could mean that the short sellers are purchasing calls to hedge their bearish bets.


  • UNH has tacked on 17.6% year-to-date, and currently stands at $63.76, a mere 1.8% below its multi-year high of $64.90, which the stock hit on May 30. And, Susquehanna seems to think UnitedHealth Group will continue with its positive streak, as the firm increased its 12-month price target estimate to $79 from $72, which forecasts a trek of 23.9%. On the same note, of the 17 analysts weighing in on the stock, 14 give it a "buy" endorsement, three consider it a "hold," and zero see it as a "sell" or worse. Likewise, UNH's ISE, CBOE, and PHLX 10-day call/put volume ratio sits at 7.44, meaning traders have bought to open more than seven calls for every put during the past two weeks. This ratio ranks just 2 percentage points below its annual high, conveying the pace of call buying as of late is at a near-annual high.


  • V reached an all-time high of $184.90 on May 20, and is currently docked just below the mark at $182.77. Even more, the stock has jumped a brow-raising 56.8% year-over-year, which is why it comes as no surprise that Guggenheim raised its 12-month price target estimate to $205 from $195, representing an upward journey of 12.2%. In other signs of optimism, V's Schaeffer's put/call open interest (SOIR) of 0.92 ranks just 6 percentage points north of its annual nadir, indicating that put open interest, relative to call open interest, is at a near-annual low for options with a shelf-life of three months or less. And, the stock's ISE, CBOE, and PHLX 50-day call/put volume ratio of 2.28 ranks in the 100th percentile of its annual range, meaning traders have bought to open more than two Visa Inc calls for every put within the last 10 weeks, at the most elevated pace of the year.

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