Options Traders Hammer Home Depot Stock After Earnings

Home Depot reported a 3% drop in customer transactions for the quarter

Digital Content Manager
Aug 16, 2022 at 9:52 AM
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The shares of Home Depot Inc (NYSE:HD) are up 1.1% at $317.87 this morning in the wake of the home improvement giant's mostly upbeat second-quarter earnings report. Home Depot shared profits of $5.05 per share on $43.79 billion in revenue, while maintaining its fiscal 2022 forecasts. However, the retail giant noted a 3% drop in customer transactions, which is likely capping the gains at the open.  

While analysts have yet to chime in with any rating or price adjustments, Telsey Advisory Group did say that Home Depot's decision not to hike its full-year forecast "makes sense and could prove conservative."

We mentioned short-term options traders' penchant for puts ahead of Home Depot's earnings report, but it's worth reiterating, as the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.31 sits in the relatively high 85th percentile of its annual range. 

In just the 15 minutes of trading, over 30,000 HD options changed hands, volume that's 10 times the average intraday amount. Most popular is the August 325 call that expires at the end of the week, with new positions being opened. The August 280 put is also popular. 

Options are an intriguing route. The security's Schaeffer's Volatility Scorecard (SVS) sits at a 82 out of 100, meaning Home Depot has exceeded option traders' volatility expectations during the past year.

HD's bounce off its June 22, annual low of $264.51 has been impressive. The stock has added more than 17% in this time period, taking out several trendlines of resistance along the way. However, the 160-day moving average looms overhead still, a trendline not toppled on a closing basis since Feb. 10. 

 

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