Options Traders Blast Target Stock Ahead of Earnings

Year-to-date, the equity is down more than 8%

Digital Content Manager
May 17, 2022 at 3:03 PM
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Target Corporation (NYSE:TGT) is up next on the earnings docket, amid a retail-heavy week of quarterly reports. The company is set to posts first-quarter results before the open tomorrow, May 18. Last seen down 2.7% to trade at $213.34, TGT is currently getting dragged lower by Walmart's (WMT) slashed full-year profit forecast. Below, we will dive deeper into the stock's recent chart performance, and unpack how the shares have usually fared post-earnings.

Target stock hit its lowest level since early April earlier today, and is just off its third-straight week of losses. The equity has struggled since the $255 level rejected last month's rally, with the once-supportive 20-day moving average now guiding shares lower. Year-to-date, TGT carries a 8.2% deficit. 

TGT 20 Day

The equity has a mixed history of post-earnings reactions, finishing four of eight next-day sessions higher in the past two years, while four were lower. This includes a 12.7% pop in August 2020, and a 6.8% dip in March 2021. This time, options traders are pricing in an 8.9% swing for TGT after earnings, which is higher than the 6% move it averaged following its last eight reports, regardless of direction.  

Options traders are already swarming the security. So far, 36,000 calls and 43,000 puts have crossed the tape, which is triple the intraday average. Most popular is the May 200 put, where positions are currently being opened, followed by the weekly 5/27 240-strike put.

It looks as though this penchant for puts has been the norm lately. This is per Target stock's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which ranks higher than 98% of readings from the past year, indicating options players have rarely been more put-biased.

 

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