Target Stock Surges to Record High Following Blowout Earnings

The equity is already up 54.6% year-over-year

Digital Content Manager
Nov 18, 2020 at 11:26 AM
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The shares of Target Corporation (NYSE:TGT) are up 4.3% at $170.36 at last check, and earlier hit an all-time-high $172.12, after the major retail name reported third-quarter earnings of $2.79 per share -- substantially higher than Wall Street's estimates of $1.60 per share -- as well as a revenue beat. The company attributed the positive results to a 155% surge in comparable digital sales, as consumers used quick-delivery services to buy everything from electronics to home goods throughout the coronavirus pandemic.

On the charts, Target stock has been carving a channel of higher highs since April. By August, the security had already completely recovered from this year's low near the $90 level, with the ascending 60-day moving average containing a few pullbacks along the way. Longer term, TGT sports a an impressive 54.6% year-over-year lead.

Analysts are mostly optimistic toward the equity, with nine of the 15 in coverage sporting a "strong buy" rating, while the remaining six carried a tepid "hold" or worse. Meanwhile, the 12-month consensus target price of $166.17 is a 3.2% discount to the stock's current levels. 

That upbeat analyst sentiment is reflected in the options pits, where calls are king. This is per Target stock's 50-day call/put volume ratio of 2.67 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% of readings from the past year. In simpler terms, calls are being picked up at a quicker-than-usual clip. 

That optimism rings true now more than ever. So far today, 55,000 calls have crossed the tape, which is 14 times the average intraday amount, and almost twice the number of puts traded. The November 170 call is the most popular, followed by the 175 call in the same monthly series, with new positions currently being opened at both as investors expect more upside for TGT when contracts expire at the end of the week.

It's no wonder why -- it seems now is an ideal time to take advantage of Target stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 36% sits in the relatively low 23rd percentile of its annual range. This means TGT sports attractively priced premiums at the moment.


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