2 Retailers Plummeting After Earnings

Options traders were leaning towards the bears' camp ahead of JCP earnings

by Emma Duncan

Published on Mar 2, 2018 at 10:36 AM

Among the stocks moving after earnings are retailers J C Penney Company Inc (NYSE:JCP) and Foot Locker, Inc. (NYSE:FL). Both companies reported lackluster same-store sales, much to the delight of remaining shorts. Below, we will take a look at how the clothing and footwear concerns are faring on the charts.

JCP Plummets on Profit Forecast

Shares of J C Penney stock are trading lower, after the company reported a same-store sales miss and issued a disappointing first-quarter profit forecast. JCP stock was 11% lower to trade at $3.49, at last check, extending its string of big post-earnings moves. The shares are now testing a trendline connecting higher lows since early November.

In the options pits, traders were leaning towards the bears' camp ahead of the company's earnings release, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing JCP with a 10-day put/call volume ratio of 0.99, ranking in the 85th percentile of its annual range. This suggests puts have been bought to open over calls at a faster-than-usual clip over the past two weeks.

Quite a few short sellers are also likely cheering JCP's earnings miss, as short interest represents 36.4% of the stock's total available float. Today, however, the stock is on the short-sale restricted (SSR) list.

Foot Locker Stock Falls on Same-Store Sales Miss

Shares of Foot Locker are also plummeting, as traders react to a fourth-quarter same-store sales miss. The stock was last seen 13% lower to trade at $39.98 -- in the area of its November bull gap. Looking broader, this is Foot Locker stock's third major bear gap since May, and it's poised to close below its 80-day moving average for the first time in 2018. 

Although short interest has dropped lately -- falling 26% over the past two reporting periods -- 9% of the stock's total available float is dedicated to these bearish bets. While FL is also on the SSR list today, quite a few remaining shorts are likely cheering.

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