Gap Stock Moves Lower Ahead of Earnings Report

The company reports second-quarter earnings after today's close

Digital Content Manager
Aug 26, 2021 at 2:36 PM
facebook X logo linkedin

Apparel retailer Gap Inc (NYSE:GPS) is making moves ahead of today's second-quarter earnings report, which is due out after the close. The company announced it acquired e-commerce startup Drapr, which has an application that allows customers to create 3D avatars to virtually try on clothing. Despite this new acquisition, the shares are down 3.7% at $26.46 at last check.

Today's negative price action could be part of a long-term trend. The equity has been trickling down the charts since surging to a May 18, nearly six-year high of $37.63. Meanwhile, the 40-day moving average has been pressuring shares lower since July, rejecting both of Gap stock's latest rallies. Longer term, though, GPS still carries a roughly 55% year-over-year lead.

GPS 40 Day

The past two years have been kind to Gap stock, which had positive post-earnings reactions in five of these eight next-day sessions. However, the retailer did post a 19.6% drop in November. Options traders are pricing in a 13.5% swing for the security this time around, which is more than double the 6.4% move GPS averaged following its last eight reports, regardless of direction. 

Analysts have been skeptical of the security, with nine of the 13 in question calling it a tepid "hold." Meanwhile, shorts have been piling on. Short interest rose 18.3% over the most recent reporting period, and the 16.30 million shares sold short now account for 8.1% of the stock's available float. 

The options pits are firmly in the bearish camp as well. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GPS' 10-day put/call volume ratio sits higher than 85% of readings from the past year. This means puts have been getting picked up at a much quicker-than-usual clip in the past two weeks.

This pessimism is getting reinforced today. While calls are outpacing puts, 25,000 puts have crossed the tape so far, which is double what is typically seen at this point. Most popular is the weekly 8/27 25-strike put, followed by the 24-strike in the series, with new being opened at the latter.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI