Options Bulls Charge Lowe's Stock After Earnings

The company's profits beat expectations

Deputy Editor
Aug 17, 2022 at 10:12 AM
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Lowe's Companies Inc (NYSE:LOW) is higher this morning, last seen up 1.7% to trade at $217.86, after the home improvement retailer entered the earnings confessional earlier today, following the lead of its blue-chip rival. Lowe's announced mixed second-quarter results, with earnings of $4.67 per share beating estimates while both revenue and same-store sales fell short of forecasts. However, the company said its full-year earnings would hit the top end of its guidance range, helping the shares brush off otherwise lukewarm results.

Call traders have something to say in the first half hour of today's session. Already, more than 10,000 bullish bets have been exchanged, which is 14 times the intraday average and nearly double the 5,209 puts traded so far -- with total volume running at 11 times what's typically seen at this point. The August 220 and 215 calls are the two most popular contracts, and new positions are being opened at both. 

A broader look shows short-term options traders have been more put-biased than usual. This is per Lowe's stock's Schaeffer's put/call open interest ratio (SOIR) of 1.68, which stands higher than 90% of readings from the past year. 

Analysts, meanwhile, have yet to chime in on the results, but are mostly optimistic towards LOW. Of the 21 in question, 14 call Lowe's stock a "strong buy" or "buy." In addition, the 12-month consensus target price of $237.51 is a 9% premium to the equity's current perch.

On the charts, LOW broke above above a former ceiling at the $212 level during yesterday's session and earlier today hit a four-month high of $219. Since bouncing off a June 22 annual low of $170.12 the 20-day moving average has helped guide shares higher, pushing the stock to a 19.2% year-over-year lead. 

 

 

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