Kylie Drives Ulta Stock Higher; Ford Ditches Plans for Chinese-Made Vehicles

AOBC is the best stock on the Nasdaq after a beat-and-raise

Patrick Martin
Aug 31, 2018 at 2:43 PM
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Stocks are mostly lower ahead of Labor Day, but all three indexes are heading towards weekly and monthly wins. Looking at individual stocks, auto name Ford Motor Company (NYSE:F) is lower, while gun maker American Outdoor Brands Corp (NASDAQ:AOBC) and cosmetics peddler Ulta Beauty Inc (NASDAQ:ULTA) are pushing higher. Here's a closer look at what's moving shares of F, AOBC, and ULTA.

Options Bears Scoop Up F Puts

Ford stock is down 3% to trade at $9.41, after the automaker abandoned its plans to sell a Chinese-made vehicle in the United States. The decision comes right in the middle of trade tensions with China, where President Donald Trump recently threatened to enact another $200 million in tariffs on Chinese goods. F stock is dangerously close to its Aug. 15 four-year low of $9.35, and has now shed nearly 24% in 2018.  

In response to the slide, Ford puts are incredibly popular today, just days after the stock was blitzed by option bulls after a U.S.-Mexico trade deal. Over 86,000 Ford puts have changed hands today -- five times the average intraday volume and pacing for an annual high. Leading the charge is the weekly 9/28 9.50-strike put, where new positions are being opened, including a block of nearly 16,000 contracts out of the gate today. Buyers of these puts expect F shares to extend their retreat beneath $9.50 over the next month.

Earnings Beat Has AOBC Firing Up the Charts

American Outdoor Brands stock is up 39.3% to trade at $13.61, the best stock on the Nasdaq today, after the company reported fiscal first-quarter earnings and revenue that exceeded analyst forecasts. The gun maker also upped its full-year guidance. AOBC is on track for its best day since February 2001. The shares have broken past the $13-$13.50 region that contained a rally in June, and is back in the black on a year-to-date basis. 

The huge upside move has drawn a flurry of options activity. Over 30,000 AOBC calls have changed hands today -- a whopping 55 times the average intraday volume and already easily an annual high. The most active options today are the January 2019 15-strike call, as well as the September 12.50 call, with new positions being opened at the latter.

Kylie Announcement Prompts ULTA Pivot

Ulta Beauty stock is up 5.5% to trade at $257.84, and earlier nabbed a fresh annual high of $268.87. The stock was lower before the bell, after the cosmetics company issued a lower-than-expected third-quarter forecast. However, the shares quickly pared these losses and turned higher, after announcing that it would begin selling reality start Kylie Jenner's Kylie Cosmetics line in stores later this year. ULTA stock is heading into a historically bullish month, and has already added 33% in the past six months.

When you zero in on near-term options traders, a put-skew is evident. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 2.45, which ranks in the 93rd percentile of its annual range. This indicates that options players have been more heavily skewed toward puts over calls on ULTA just 7% of the time during the past year. Today, however, Ulta Beauty calls are trading at 12 times the average intraday pace, with 22,000 contracts exchanged, compared to 16,000 puts.


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