Bears Cheer as Staples, Inc. (SPLS) Same-Day Delivery Plans Fail to Impress

Staples, Inc. (SPLS) stock is slipping on the charts, as investors are less than enthused by plans for same-day delivery

Jun 14, 2016 at 10:31 AM
facebook twitter linkedin

Office supply specialist Staples, Inc. (NASDAQ:SPLS) announced this morning that it will offer same-day delivery of online orders in some metropolitan areas -- beginning with Boston, Dallas, and New York -- for a $14.99 fee. The news doesn't seem to have investors particularly excited, however, as the stock is trading 0.9% lower at $8.55. Considering SPLS' current sentiment backdrop, another slide down the charts may be exactly what short sellers and options traders want to see.

Specifically, short interest on SPLS rose by a hefty 33% during the two most recent reporting periods, and now accounts for more than 5% of the stock's total float. This increase shows a significant uptick in pessimism, but the 33.6 million shares sold short fall well shy of all-time highs around 95 million. In other words, bears could continue to pile on, putting further pressure on the stock.

Options traders have been unusually bearish, as well. Across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SPLS has a 50-day put/call volume ratio of 0.25. While this shows long calls outnumbering puts by a 4-to-1 margin on an absolute basis, the ratio ranks in the put-skewed 96th percentile of its 12-month range.

The preference for puts is even clearer among options set to expire in the next three months. With a Schaeffer's put/call open interest ratio (SOIR) of 2.18, SPLS puts more than double calls. Plus, this ratio sits higher than 94% of all readings in the past year, indicating near-term traders have rarely been more put-heavy toward the stock.

Analysts don't appear optimistic toward SPLS, either. Of the 10 providing coverage on the stock, only one recommends buying it, while the remaining nine maintain tepid "hold" ratings.

Of course, this caution appears to be warranted, considering the stock's long-term technical performance. Specifically, SPLS has given up 47% year-over-year. More recently, the shares found a foothold around the $8 level after Staples, Inc.'s (NASDAQ:SPLS) failed merger with Office Depot Inc (NASDAQ:ODP) sent them plummeting. But the stock has since run into trouble at the $9 mark, which served as resistance earlier this year.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners