Bears Welcome J C Penney Company Inc (JCP) Scandal, Drop

J C Penney Company Inc (JCP) is buckling under allegations of deceptive advertising

by Alex Eppstein

Published on Dec 9, 2015 at 1:43 PM

J C Penney Company Inc (NYSE:JCP) is licking its wounds this afternoon, after the retailer was sued by -- and subsequently settled with -- U.S. regulators over charges of mislabeling textile products. JCP will pay $290,000 for allegedly deceiving consumers into believing certain rayon products were made with bamboo. At last check, the stock has tumbled 2.9% at $7.50.

In the last couple weeks, option traders have been betting on losses for the shares. JCP's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.93 ranks only 4 percentage points from an annual high. Echoing this prevailing skepticism, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.84 outstrips 88% of comparable readings from the past year.

Today, though, JCP's most active strike is the December 8 call. It looks like traders may be buying to open the out-of-the-money option, expecting the shares will muscle back atop $8 by next Friday's closing bell, when front-month contracts expire.

Shifting our gaze elsewhere, short sellers and analysts have taken a glass-half-empty approach toward JCP. On the one hand, 31.4% of the equity's float is sold short. On the other, close to two-thirds of analysts covering the stock have deemed it a "hold" or worse.

J C Penney Company Inc (NYSE:JCP) has done very little to inspire confidence on Wall Street lately. Since flirting with double-digit territory in September and October, the shares have retreated rapidly, losing roughly one-quarter of their value.

A Schaeffer's exclusive

6 Sectors for Summer

Access your FREE insider report before it's too late!


  
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Research Exposes Shortcut to Stock Market Wins
A simple way to stop picking losers, and start cashing in like Wall Street's elite.
Google Postpones Android Reveal, "Now is Not the Time to Celebrate"
"Now is not the time to celebrate," Google said in a message on its website
ZNGA Zooms to 8-Year High on Billion-Dollar Deal
ZNGA is planning to buy Peak for $1.8 billion
Huge New Legal Marijuana Market Has Shortage Crisis
250 million Europeans have access to medical marijuana. There's already a shortage....