Target Stock Bounces from Key Trendline on Buyback Buzz

TGT nabbed a record high back on Sept. 6

by Patrick Martin

Published on Sep 19, 2019 at 10:08 AM

The shares of Target Corporation (NYSE:TGT) are up 0.4% to trade at $107.37 today, after the retailer announced a new $5 billion share buyback plan, which will be completed in its 2020 fiscal year. Target also unveiled a quarterly dividend payment of 66 cents per share.

Target stock remains within striking distance of its Sept. 6 record high of $110.93. The shares have taken a breather since then, but found support at their ascending 20-day moving average. Overall, TGT is now up 63% in 2019, thanks in part to a huge earnings-induced bull gap in late August.

There's a tremendous amount of pessimism in the options pits. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows 1.17 puts have been bought to open for every call in the past 10 days, a ratio that ranks in the bearishly skewed 86th annual percentile.

Echoing this, near-term options traders appear positioned for a move to the downside, according to the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.09. This reading ranks in the 99th annual percentile, showing a rare put-skew among short-term options traders.

The good news for premium buyers is that the security’s Schaeffer's Volatility Index (SVI) of 22% ranks in the 14th annual percentile, indicating short-term options are relatively cheap, from a volatility perspective. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) of 97 shows Target stock's strong tendency to make bigger-than-expected moves during the past year, relative to what the options market was pricing in.

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