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Lowe's Stock Dips After Revenue Miss

Puts are winning out in the options pits

Digital Content Manager
May 18, 2022 at 10:07 AM
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Lowe's Companies Inc (NYSE:LOW) entered the earnings confessional earlier today, following the lead of its blue-chip rival. The home improvement retailer is not faring as well, however, despite announcing better-than-expected first quarter earnings of $3.51 per share. The company's revenue miss is weighing on the stock, plus, same-store sales fell 4% for the quarter, as colder spring temperatures negatively impacted demand for grills and patio furniture. The equity is down 2.3% at $189.55 at last check.

The security has been trudging lower so far this year, with the exception of a late-March rally that fell short of the $240 mark. Overhead pressure at the 30-day moving average came back into place after that surge, and has been acting as resistance ever since. Year-to-date, LOW has shed 26.7%.

Analysts have yet to chime in on the results, but are leaning optimistic towards LOW. Of the 15 in question, 10 call Lowe's stock a "strong buy," while five say "hold." In addition, the 12-month consensus target price of $264.44 is a 36.3% premium to the equity's current perch.

Meanwhile, short-term options traders have been more put-biased than usual. This is per LOW's Schaeffer's put/call open interest ratio (SOIR) of 1.59, which stands higher than 88% of readings from the past year. 

That penchant for puts is on display again today. So far, 4,294 calls and 6,958 puts have crossed the tape, or seven times the options volume that's typically seen at this point. The most popular contract is the May 190 put, followed by the 6/10 165-strike put, with new positions being opened at the latter.

 

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