Beauty Stock Boosted by Upbeat Outlook

Calls are flying off the shelves today

Deputy Editor
Sep 21, 2022 at 10:54 AM
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The shares of cosmetic giant Coty Inc (NYSE:COTY) are up 5% to trade at $8.18 at last glance, earlier as high as $8.34, after the company raised its full-year forecast and gross margin forecast, citing strong demand for luxury beauty products. Plus, the company expects its skincare revenues to double over the next three years and continue upward from there. 

Today's pop has COTY breaking above pressure at its 180-day moving average, though the $8.40 level -- which has kept a cap on gains since April -- still lingers above. Year-to-date, the CoverGirl parent is down roughly 22%. 

Before today, puts ruled the roost in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.49 puts have been picked up for every call in the last 10 weeks. This ratio ranks higher than 95% of readings from the past year, showing this penchant for puts is unusually high. 

However, 14,000 calls have been exchanged so far this morning -- 11 times the intraday average -- in comparison to just 1,232 puts. The weekly 9/23 8.50-strike call is the most active, with new positions being sold to open. The selling activity here indicates options traders are eyeing the $8.50 level as a short-term ceiling in the next week or so.


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