Options Bulls Blast LEVI After Q3 Earnings Beat

The equity is up over 23% in the last three months

Digital Content Manager
Oct 7, 2020 at 2:54 PM
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The shares of Levi Strauss & Co. (NYSE:LEVI) are up 5.4% at $15.54 at last check, after the apparel company reported better-than-expected fiscal third-quarter earnings and revenue. As a result, LEVI earned no less than four price-target hikes this morning, including one from Guggenheim to $20 from $16. The analyst in question said the stock is "playing offense" amid disruption, which will allow the retailer to emerge from COVID-19 in a stronger competitive position. 

Before today's earnings beat pushed the equity up higher on the charts, LEVI shares had already been getting support from the 10-day moving average. However, the past couple of months had been fairly uneventful for LEVI, which was trading mostly lower and then sideways after a rally to the $17 mark in September. Over the last three months, however, the stock has gained 23.4%.

LEVI 10 Day

Analysts were mostly optimistic towards the security coming into today, with five of the seven in coverage carrying a "strong buy" rating, and the remaining two sporting a tepid "hold." Meanwhile, the 12-month consensus price target of $18.50 is a whopping 18.2% premium to current levels.

Digging deeper, short sellers have been building their positions, too. Short interest is up 10.4% in the last two reporting periods, and the 7.44 million shares sold short make up a substantial 12.6% of the stock's available float. In other words, it would take almost a week to buy back these bearish bets, at the security's average pace of trading.

The options pits are leaning heavily optimistic, with calls popular. LEVI sports a 50-day call/put volume ratio of 4.76 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 89th percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.

That upbeat sentiment still rings true today. At last check, 29,000 calls have crossed the tape, which is 11 times the average intraday amount, and more than three times the number of puts traded. Most popular is the monthly October 15 call, followed by the 16-strike call in the same series, with positions currently being opened at both.


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