Tech Data Stock Drops Fast on Analyst Note

Traders have taken tremendous interest in Tech Data put options

Aug 27, 2019 at 1:51 PM
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Tech Data Corp (NASDAQ:TECD) shares are falling sharply today after Citigroup cut its price target to $91 from $100. The brokerage firm put the stock on a list of names it believes are seeing negative catalysts, and expects the company's second-quarter results to come in at the lower end of the expected range. Citi believes TECD is still worthy of a tepid "neutral" rating because of the company's solid share buyback plan.

TECD stock was last seen trading down 4.9% at $81.79, extending a notable pullback below the 200-day moving average from earlier this month. This would be the security's lowest close since the first week of 2019.

tecd stock chart aug 27

Speaking of earnings, Tech Data's second-quarter report is due out the morning of Thursday, Aug. 29, and the shares could be in for volatile price action. That is, options traders are pricing in a post-earnings swing of 12.9% -- right in line with the two-year average post-earnings move of 13.1%.

As for sentiment, traders seem to be taking a bearish approach, since puts are piled up atop the top open interest positions list. The most popular contract on the distributions specialist is the September 95 put, followed by the 90 and 85 puts from the same series. The September 75 put is also not far behind. Overall, the Schaeffer's put/call open interest ratio (SOIR) of 3.36 shows put open interest more than triples call open interest among contracts that expire within three months.

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