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With a turn in the earnings confessional quickly approaching, traders ambushed The TJX Companies, Inc. (NYSE:TJX - 44.66) in the options pits on Thursday. Roughly 17,000 puts changed hands, reflecting six times the equity's average daily put volume. By comparison, just over 1,100 calls crossed the tape during yesterday's session.
The bulk of the trading centered around the out-of-the-money September 42.50 strike, where north of 14,700 puts were traded at an average price of $0.59. About half of them crossed at the bid price, suggesting they were sold. Meanwhile, open interest at this strike soared by 13,147 contracts overnight, making it safe to assume that most of the volume consisted of newly opened positions. This option is now home to peak put open interest of 13,386 contracts. In order to collect the maximum profit from these sold-to-open puts, the stock must maintain its perch atop the $42.50 mark through September expiration. At this point, the options expire worthless, and the put sellers keep the full premium collected.
The equity has seen plenty of put activity prior to Thursday's session. The Schaeffer's put/call open interest ratio (SOIR) checks in at 2.72, indicating that puts nearly triple calls among the front three-months' series of options. In fact, this ratio is just eight percentage points below an annual peak, implying that near-term options players have rarely been more put-heavy toward the stock during the last 12 months.
While the majority of brokerage firms covering the discount fashion retailer seem to maintain an upbeat outlook toward TJX, there are still a few skeptics in the mix. The equity currently boasts 11 "strong buys" and two "buy" endorsements, compared to nine "holds" and zero "sell" recommendations. Meanwhile, Thomson Reuters pegs the security's average 12-month price target at $47.05 -- representing a slim premium of 4.6% to Thursday's closing price of $45. This configuration leaves some wiggle room for a few upgrades and/or price-target hikes, which could push the stock higher.
Technically speaking, TJX has put forth a solid performance, having gained about 69% during the last 12 months, and more than 39% year-to-date. In fact, the stock continues to trade above long-term, double-barreled support at its 10-week and 20-week moving averages -- the latter of which has not been breached on a weekly closing basis since last September.
As previously noted, TJX is on tap to report quarterly earnings next week on Aug. 14, and has surpassed analysts' bottom-line estimates in three of the past four quarters. What's more, the company raised its second-quarter and full-year guidance at the beginning of the month due to higher-than-anticipated July same-sale stores. In other words, another earnings surprise could leave yesterday's put sellers with a tidy profit by back-month expiration.