Options Bulls Blast Luxury Retail Stock After Revenue Beat

The equity is already up a jaw-dropping 511% year-over-year

Digital Content Manager
Nov 13, 2020 at 2:01 PM
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The shares of Farfetch Ltd (NYSE:FTCH) are up 8.1% at $46.73 at last check, and earlier hit an all-time-high of $50.36. The luxury retail stock reported worse-than-expected third-quarter losses of $1.58 per share, but also a revenue increase of 71% to $438 million, which beat analyst's estimates. The company attributed the strong results to consumers growing to 2.7 million from 1.9 million a year earlier. As a result, FTCH earned no fewer than seven price-target hikes this morning, including a massive one from BTIG to $62 from $31. 

On the charts, the security has experienced unprecedented growth this year. Shares went into recovery mode almost immediately after dropping to a March 18, all-time-low of $6. By August, FTCH was already breaking records, with the shares' 80-day moving average containing blips last month. Longer term, FTCH sports a jaw-dropping 511% year-over-year lead.

FTCH

Though shorts are already hitting exits, there is still plenty of pessimism left to be unwound, which could push FTCH even higher. Short interest is down 5.8% in the last two reporting periods, yet the 22.47 million shares sold short account for 11.3% of the stock's available float. In other words, it would take almost a week to buy back these bearish bets, at the equity's average pace of daily trading. 

Tailwinds could also come from a sentiment shift in the options pits, where puts are popular. This is per the stock's 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 80% of readings from the past year. In simpler terms, puts are being picked up at a quicker-than-usual clip. 

That shift is already happening today. So far, 18,000 calls have crossed the tape, which is six times the average intraday amount. Most popular is the November 55 call, followed by the 50-strike call in the same monthly series, with new positions now being opened at both.

 

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