Urban Outfitters Puts Pop Ahead of Third-Quarter Report

Short interest has seen a significant drop during the most recent reporting period, too

by Emma Duncan

Published on Nov 18, 2019 at 12:04 PM

Despite receiving an early morning bull note from RBC to $28 from $23, Urban Outfitters, Inc. (NASDAQ:URBN) is down 2.7% at $30.22 today, potentially sinking alongside its sector peers. URBN may also be in focus for the options market, as the retailer is slated to report third-quarter results after the market close, tomorrow, Nov. 19. 

Urban Outfitters stock has been in recovery mode since touching an almost two-year low of $19.63 this past Aug. 15. Over the past three months alone, the shares have tacked on 46%, with a layer of support seen at their rising 30-day moving average. Also in play was a late-September bull gap sent the equity back above the $28 mark for the first time since early May.

Daily URBN With 30MA

Puts are popping off in the options pits today, with 16,000 on the tape so far. This is 70 times URBN's expected rate, with volume pacing for the 100th percentile of its annual range.  Just over 6,000 contracts have been exchanged at both the December 29 put and January 2020 30-strike put, suggesting one trader is closing and rolling up their December position into the January series, potentially a response to the stock's recent climb up the charts.

Meanwhile, short interest dropped 21.7% during the most recent reporting period, but still accounts for almost 19% of the stock's total available float. In simpler terms, this equates to 3.7 times URBN's average daily trading volume. 

During the past eight quarters, URBN has averaged a 3.7% swing the day after earnings, regardless of direction. This time around, the options market is pricing in a more than quadruple post-earnings move of 15.9% shift for the shares.

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