Options Traders Pile on Discount Retailer After Earnings Beat

Call volume is running at seven times the intraday average

Assistant Editor
May 27, 2021 at 10:50 AM
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Dollar General Corp. (NYSE:DG) took a trip to the earnings confessional this morning, reporting first-quarter earnings of $2.82 per share, well above Wall Street's projections of $2.19 per share. The retailer's revenue was in line with forecasts, too, while comparable-store sales experienced a smaller-than-expected dip as customers hit the stores with a fresh round of stimulus checks. In response, Dollar General raised its full-year forecast. At last check, the security was last seen up 2.3% to trade at $204.66.

Today's positive price action comes just a few days after DG received a bear note from Bank of America Securities. Dollar General stock is now once again trading above the $204 mark and 70-day moving average, both of which put pressure on shares for the last three sessions. Still, the equity is down 3.2% year-to-date.

The options pits are brimming with activity today. So far, 6,534 calls  have already crossed the tape, which is seven times what is typically seen at this point. By far, the weekly 5/28 210-strike call is the most popular, followed by the 207.50-strike call in the same series, with new positions being opened at both.

Puts have been extremely popular over the past 10 weeks, meaning a shift in the options pits could propel Dollar General stock higher. This is per the stock's 50-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 6% of readings from the past year. In other words, long puts have been getting picked up a faster-than-usual clip.

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