TJX Options Traders Call-Heavy Ahead of Earnings

TJX moved higher after the retailer's last two earnings reports

Managing Editor
Aug 20, 2018 at 11:05 AM
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Retailer TJX Companies Inc (NYSE:TJX) stock is up 0.3% in today's trading, last seen at $100.61, as traders gear up for the company's second-quarter report. The TJ Maxx parent is scheduled to share its quarterly results before the market opens tomorrow, Aug. 21. Below, we will take a look at how the retail giant has been faring on the charts, as well as to what the options market is pricing in for the stock's post-earnings moves.

TJX stock has been in a long-term uptrend on the charts, seeing a surge of more than 31% year-to-date, with a line of support stemming from the rising 40-day moving average. In fact, the shares touched a record peak of $101.49 on Aug. 13.

Daily Chart of TJX With 40MA

Looking at TJX's earnings history, the stock has closed higher or flat the day after the company reported in three of the last four quarters, including a 6.9% surge in February, after the company reported solid same-store sales. Looking back eight quarters, the shares have moved 3.2% the day after earnings, on average, regardless of direction. This time around, however, the options market is pricing in a larger-than-usual 5.6% move for Tuesday's trading.

Digging deeper, options traders have been heavily bullish in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows the the equity's 10-day call/put volume ratio of 5.60 in the 93rd annual percentile. In other words, TJX calls have been purchased over puts at a faster-than-usual clip in the past two weeks.

Echoing this, short-term traders are more call-skewed than usual, with the security's Schaeffer's put/call open interest ratio (SOIR) of 0.38 ranking in the 7th percentile of its annual range. This indicates that near-term call open interest outweighs put open interest by a wider-than-usual margin right now.

Moving toward analyst sentiment, just this morning, Jefferies hiked its price target on TJX to $98. However, that still represents a discount to the equity's current perch. Echoing that, despite TJX stock's recent quest for record highs, seven of 22 analysts following the shares maintain tepid "hold" or worse ratings, and the average 12-month price target sits at just $100.05. A solid earnings showing tomorrow could fuel a round of upgrades and price-target hikes for the retail concern.


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