Calls, Bull Notes Galore For Stitch Fix Stock After Earnings

Six brokerages have already upped their SFIX price targets

by Patrick Martin

Published on Dec 10, 2019 at 10:04 AM
Updated on Dec 10, 2019 at 10:08 AM

A big earnings winner this morning is Stitch Fix Inc (NASDAQ:SFIX), after the e-tailer broke even for its fiscal first quarter, toppling the estimated loss of 6 cents per share. Revenue and active clients also topped expectations, prompting six price-target hikes already, the highest coming from SunTrust Robinson to $38 from $36. J.P. Morgan Securities glowed about the company's new Shop Your Looks feature, while RBC praised its direct-buy functionality. 

At last check, Stitch Fix stock was up 9.6% to trade at $27.42, on track for its best single-session gain since June. The shares have blown past former resistance at their 160-day moving average, and are now trading at their highest level since late July. 

As alluded to last week, options traders have been more bearish than usual toward Stitch Fix. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.97 ranks in the 90th annual percentile. So, while calls have outpaced puts on an absolute basis, the rate of put buying relative to call buying has been accelerated.

Echoing this, the stock’s Schaeffer's put/call open interest ratio (SOIR) of 1.33 ranks in the 89th percentile of its annual range, showing there is an unusual put-skew in the front three-months' series. An unraveling of this bearish sentiment could create tailwinds for SFIX.

Shifting gears to today, calls have exploded. At last check, over 8,750 calls have changed hands, 20 times the average intraday amount, and volume pacing for the 100th percentile of its annual range. Leading the charge is the December 28 call, where some selling activity is detected. There are also new positions being opened at the weekly 12/13 29-strike call.

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