Retail Headwinds Weigh on Sector Heavyweights

Options bears are blasting Target stock today

Deputy Editor
Jul 26, 2022 at 10:23 AM
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The retail sector is in sell-off mode today, after Walmart (WMT) slashed its quarterly and full-year profit outlooks, as inflation forces consumers to cut back on spending. Target Corp (NYSE:TGT) and Amazon.com, Inc. (NASDAQ:AMZN) are suffering headwinds from Walmart's announcement, last seen sporting losses of 4% at $151.17 and 3% at $117.60, respectively.

Target stock is today falling back below its 50-day moving average, and is now on track to log its third-straight daily loss. The equity is still eyeing a nice gain for July, but is now down 35.2% year-to-date.

Options bears are taking an interest in Target stock, with 18,000 puts exchanged so far, or six times the intraday average, compared to 6,583 calls. The December 125 put is the most popular, followed by the 7/29 142-strike put, with positions currently being opened at the former. 

Moving onto Amazon.com stock, the descending 70-day moving average is once again putting pressure on shares, after a familiar ceiling at the $126 level rejected the equity's latest rally. Year-over-year, AMZN carries a 36.3% deficit.

Amazon.com is slated to step into the earnings confessional after the close on Thursday, July 28. The equity tends to underperform after reporting quarterly results, with six of the last eight post-earnings sessions swinging negative, including a 14% drop in April. Over the last two years, AMZN averaged a 6.1% next-day move, regardless of direction, and options traders are pricing in a much bigger 10.4% move this time around.

 

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