Deere Stock Rumbles to Record High After Beat-and-Raise

Calls are trading at 26 times the average intraday amount this morning

Assistant Editor
Aug 21, 2020 at 9:49 AM
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Popular equipment name Deere & Company (NYSE:DE), otherwise known as John Deere, is up 3% at $196.90. The company announced adjusted fiscal third-quarter earnings of $2.57 -- much higher than the anticipated $1.26 per share -- while revenue soared above estimates as well. Furthermore, Deere raised its full-year guidance, as farm equipment demand proves to be resilient even amid the coronavirus pandemic. 

Right out of the gate, Deere stock nabbed a new record high of $199.45. The shares have now cleared out of congestion above the $190 region, which coincides with their ascending 10-day moving average. Now eyeing its fourth-straight week in the black, the stock is up around 14% year-to-date.

On the analyst front, seven out of the 12 in coverage sport a "buy" or better on Deere stock, with four at a "hold" and one at a "strong sell." Potential price-target adjustments could be on the horizon, as DE's 12-month consensus price target of $184.50 is a 3.5% discount to last night's close.

In the last 10 days, 1.31 calls have been bought for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits in the 85th percentile of its annual range, meaning options traders have rarely been this call-heavy in the past 12 months. 

Today, options traders are piling on in droves. In just the first hour of trading, 10,000 calls have changed hands, 26 times the average intraday amount and volume pacing for the 100th percentile of its annual range. Leading the charge is the weekly 8/28 225- and 235-strike calls, with new positions being opened at each. Buyers of these calls are banking on more gains for DE in the next week, when the contracts expire.

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