Target Puts Popular After Dismal Holiday Sales

Target's holiday sales were only up 1.4% in 2019, compared to 5.7% in 2018

Managing Editor
Jan 15, 2020 at 10:05 AM
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One of the worst stocks on the New York Stock Exchange (NYSE) today is Target Corporation (NYSE:TGT), down 6.3% to trade at $117.34. The retailer's holiday sales figures of 1.4% came in drastically lower than last year's 5.7% growth, with underperformance in the electronics, toys, and home products areas. 

Target stock hit a record high of $130.24 on Dec. 20, but has spent 2020 consolidating below the $126 level. Today's drop is set to be its worst since Nov. 2018, although the shares' 80-day moving average is attempting to contain the damage. Year-over-year, TGT remains up 75%. 

Options traders have been betting bearishly. At the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.02 puts have been bought to open for every call over the last 10 days-- a ratio that sits higher than 81% of all other readings from the past year.

Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.92, which sits in the 100th percentile of its annual range. This means short-term speculators are more put-heavy than usual.

Puts are popular out of the gate today too. In just the first hour of trading, 17,000 puts have changed hands, 10 times the average intraday amount and volume pacing for the 100th percentile of its annual range. Leading the charge is the January 2020 115-strike put, and there are also new positions being opened at the weekly 2/28 110-strike put.

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