Options Data Attractive On Tapestry Stock as Shares Hit Fresh High

TPR shares just tapped a four-year peak

by Josh Selway

Published on Feb 27, 2018 at 10:45 AM

After buying Kate Spade back in October, Coach changed its name to Tapestry Inc (NYSE:TPR), and since then the stock has been on fire. In fact, TPR shares just touched a four-year high of $51.64 today -- likely enjoying a halo lift from Macy's (M) -- meaning they've now rallied over 33% since their early October lows. Maybe more importantly, the equity has cleared the $48 level, the site of a 2014 bear gap that had acted as technical resistance. Data suggests the security may be an attractive target for options traders, too.

Specifically, Schaeffer's Senior Quantitative Analyst Rocky White compiled a list of stocks that are trading near 52-week highs yet have low Schaeffer's Volatility Indexes (SVI). In other words, volatility expectations remain low despite impressive technical strength. As it stands now, TPR has an SVI of 21%, which is just 6 percentage points from a 12-month low, hinting at enticingly low premiums for near-term options contracts.

For what it's worth, the stock has flashed a similar "signal" one other time since 2008, and jumped 7.8% a month afterward. A similar move this time around would place the equity near the $55.65 level.

Still, sentiment is mixed on Tapestry shares. On the one hand, analysts are very bullish, with 15 of 23 handing out "strong buy" ratings. In a similar vein, short interest has been falling for months, including a nearly 24% drop in the last reporting period, and less than 3% of the float is now sold short.

In the options pits, however, traders have been gobbling up long puts over calls. This is according to TPR's 10-day put/call volume ratio of 6.54 at the International Securities Exchange (ISE), Chicago Board Options Exchange (Cboe), and NASDAQ OMX PHLX (PHLX), which ranks just 2 percentage points from a 12-month high. Of course, given the stock's outperformance, it's possible some of these put traders are shareholders using options to hedge.


START YOUR SATURDAY SMARTER.


The best of Schaeffer's market analysis in a 5-minute weekly read.


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


IRA/401K Investment Guide: 2019 Stock Market Crash
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Dow Stock Stays Hot Amid Buyout Rumors
Tupperware suspended its quarterly common dividend last week
SunPower Stock Shines After Spin-Off
SPWR has found support at its 320-day trendline
16-Hour "Jump Trades" Unlock New Profit Potential
Click to continue to advertiser's site.