Kohl's Options Volume Spikes Ahead Of Earnings

Kohl's stock has relied on support in the $58 area

Managing Editor
May 21, 2018 at 12:33 PM
facebook twitter linkedin

Retail earnings will continue to trickle in this week, with department store chain Kohl's Corporation (NYSE:KSS) scheduled to report its first-quarter results before the market opens tomorrow, May 22. KSS stock has averaged a next-day move of 6.9% over the past eight quarters, yet this time around, the options market is pricing in a much larger next-day move of 11.6%, regardless of direction, based on implied volatility data.

Heading into the event, options volume has picked up today, with roughly 5,000 calls and 5,300 puts crossing the tape -- double the average intraday rate. KSS' weekly 5/25 69.50-strike call is garnering notable attention, with new positions being opened. If these calls are being bought, traders are wagering on post-earnings upside from KSS shares through the end of this week, when the contracts expire. Meanwhile, the January 2020 50-strike put is most popular, and it looks like one trader may have sold the puts to open to bet on a long-term floor for Kohl's shares.

Although KSS stock's recent history of earnings reactions has been negative -- the shares have closed lower the day after their report in three of the last four quarters -- the equity today is set for its highest close in weeks. The security is up almost 20% in 2018, and was last seen trading 1.8% higher at $64.61. The retail stock has relied on support around the $58 level all year, which is home to a 38.2% Fibonacci retracement of KSS' rally from its 2017 fourth-quarter low to its late-February two-year high at $69.48.

KSS Fib Levels Chart

Should Kohl's deliver an upbeat earnings report, a short squeeze could provide tailwinds for the equity. Short interest increased by nearly 10% in the most recent reporting period to 29.77 million shares, the highest since mid-December. This represents nearly 18% of KSS' total available float, and almost nine days of pent-up buying power, at the stock's average daily trading volume.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners