Put Options Pop on Ascena Retail Stock Before Earnings

ASNA options traders have been extremely put-heavy in recent weeks

Managing Editor
Sep 21, 2018 at 12:49 PM
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Ascena Retail Group Inc (NASDAQ:ASNA) is up 2.7% at $4.29, at last check, as traders gear up for the retailer's fiscal fourth-quarter earnings report, which is scheduled for after the market closes, Monday, Sept. 24. Below, we will take a look at how Ascena stock has been faring on the charts, and what the options market is pricing in for its post-earnings moves. 

ASNA has seen some improvement on the charts, breaking out in mid-May above the $2.00-$2.40 range that contained it months. The shares have more than doubled since touching the Oct. 16 bottom of $1.69, picking up roughly 80% year-to-date.

Daily Chart of ASNA with Highlights

Digging into its earnings history, ASNA closed higher the day after reporting last quarter, surging 7.9%. Overall the shares have averaged a 10.8% move the day after earnings over the last two years, regardless of direction. This time around, the at-the-money October 4 straddle is pricing in an 18.4% move.

In the options pits, traders have been leaning bearish, as per the stock's 10-day put/call volume ratio of 3.48 International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Plus, this lofty ratio ranks in the 88th percentile of its annual range, meaning puts have been bought over calls at a faster-than-usual clip.

Coincidentally, during this time frame, the aforementioned October 4 put has seen the highest increase in open interest. Over 1,600 contracts were added there, with data pointing to mostly buy-to-open activity.

Lastly, short interest on ASNA rose 2% in the most recent reporting period, and now accounts for 34% of the stock's total available float. At the retail concern's average pace of trading, it would take shorts over a month to buy back their bearish bets.


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