Data Stock Sinks After Being Dropped by BJ's Wholesale

Options traders have turned pessimistic on the stock

Deputy Editor
Jan 19, 2022 at 9:43 AM
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The shares of Alliance Data Systems Corporation (NYSE:ADS) are lower this morning, trading down 4.4% at $66.15, following news that BJ's Wholesale (BJ) is dropping the company and moving to Capital One (COF) with its co-branded credit card. BJ's Wholesale is also suing ADS on assertions that it slowed down the process of transferring existing credit card accounts. 

A look at the charts shows ADS chopping lower since its early June high of $102.22, with continuous pressure at the 120-day moving average guiding shares lower during the past few months. On a brighter note, the equity looks to have found a floor at the $66 level, and still boasts a roughly 21% year-over-year lead. 

Analysts have been bullish on ADS, which could lead to downgrades. The 12-month consensus price target of $104.50 is a 51.5% premium to current levels, while 10 of the 17 in coverage call the stock a "buy" or better, with not a single "sell" rating to be seen. 

Options players, on the other hand, lean bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 4.66 stands higher than 94% of annual readings, meaning long puts are being picked up at a much quicker-than-usual clip. 

Echoing this, ADS' Schaeffer's put/call open interest ratio (SOIR) of 1.00 stands higher than 76% of readings in its 12-month range, implying short-term options traders have rarely been more put-biased. 

 




 
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