Schaeffer's Trading Floor Blog

Stocks to Watch Wednesday: J.C. Penney Company, Inc., Yum! Brands, Inc., and Coach, Inc.

Analyzing JCP, YUM, and COH ahead of tomorrow's trading

by 2/4/2014 4:37 PM
Stocks quoted in this article:

Momentum names that made notable moves on Tuesday and could continue to do so into Wednesday's session include department store chain J.C. Penney Company, Inc. (NYSE:JCP), fast-food titan Yum! Brands, Inc. (NYSE:YUM), and high-end retailer Coach, Inc. (NYSE:COH). Here is a quick look at these stocks ahead of tomorrow's opening bell.

J.C. Penney Company, Inc. (NYSE:JCP)

Though J.C. Penney posted an increase in same-store sales for the fourth quarter, analysts at Sterne Agee claimed the figures were "not good enough," causing the shares to plunge below $5 for the first time ever, and finish the session with a 10.6% loss at $5.08. Subsequently, JCP found itself on the short-sale restricted list, with option traders picking up nearly four times the daily average amount of contracts. The majority of the trades crossed through the March series of puts, as these options made up five of the eight most active strikes of the day.

Yum! Brands, Inc. (NYSE:YUM)

Yum! Brands' fourth-quarter earnings topped analysts' estimates, and the company reiterated its 2014 profit guidance, causing the shares to spike 8.9% to perch at $72.06. Today's positive price action marked a change of pace for the equity, which has underperformed the broader S&P 500 Index (SPX) by more than 8 percentage points during the past month. By the end of the session, the number of calls traded outpaced the average daily volume by a margin of roughly 5-to-1. What's more, the six most active options of the day were short-term calls that expire within the next three weeks.

Coach, Inc. (NYSE:COH)

Coach finished the session with a 1.9% loss at $45.63, after earlier dipping to a multi-year low of $45.36. Today's drop is just more of the same for the stock, which has already shed 18.7% since the start of 2014. Therefore, it comes as no surprise that COH option traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open five puts for every two calls during the past 10 weeks. The resulting 50-day put/call volume ratio of 2.52 ranks the highest of all comparable readings from the past year, indicating the preference for long puts over long calls is at an annual high.


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