Call Traders Target Retailer Despite Results Miss

Customers frequented the stores less this past quarter

Deputy Editor
Mar 16, 2023 at 11:06 AM
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Dollar General Corp (NYSE:DG) is in the spotlight today, after the discount retailer's fourth-quarter results just barely missed estimates. Plus, same-store sales rose 5.7%, which is lower than the 6% anticipated by analysts. The company reiterated its full-year sales and profit forecasts, however, noting that though stores saw a  "modest decrease in customer traffic," the transaction amount was higher, which Telsey Advisory Group attributed to consolidating trips. 

On the charts, DG has been struggling to bounce back from its late-February bear gap, which occurred after the company's initial full-year guidance. Down 1.2% to trade at $215.87 at last glance, the shares are down 11.9% year-to-date, and hanging on to a underwhelming 2.2% year-over-year lead.

Calls have been more popular than usual in the options pits, per DG's 10-day call/put volume ratio of 1.62 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks higher than 87% of readings from the past year. 

So far today, 4,044 calls and 1,676 puts have been exchanged, which is four times the volume typically seen at this point. The March 225 call is the most popular, followed by the 220 call in the same monthly series.

These options are looking reasonably priced at the moment, too. Dollar General stock's Schaeffer's Volatility Index (SVI) of 28%, which sits in the 24th percentile of its annual range. 

 

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