Lowe's Stock Rises on Profit Beat

Options traders are changing their tune after the event

Deputy Editor
Aug 22, 2023 at 10:44 AM
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Lowe's Companies Inc (NYSE:LOW) announced better-than-expected second-quarter profits of $4.56 per share before the bell this morning, though revenue of $24.96 billion just barely missed estimates. Fellow home improvement name Home Depot (HD) reported strong earnings last week as well, giving Wall Street hope regarding consumer sentiment

At last glance, LOW is up 2.9% at $223.86 and earlier traded as high as $227.28. Today's pop has the stock jumping back above its 60-day moving average, which provided support at the beginning of this month. Year-to-date, the equity is up 12.6%. 

Options bearstargeted LOW ahead of the event, per the security's 10-day put/call volume ratio of 3.12 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 94% of readings from the past year, showing puts being picked up at much faster-than-usual rate. 

Today, however, bulls are in control. So far, 13,000 calls have crossed the tape -- 11 times the amount typically seen at this point -- in comparison to 6,427 puts. The weekly 8/25 235-strike call is the most active contract, followed by the 230-strike call in the same series, with new positions being opened at both. 

Analysts have yet to chime in on the news. Of the 25 in coverage, 13 carry a "buy" or better rating, with 12 a "hold," and one "strong sell." The 12-month consensus price target of $238.38 is a 6.1% premium to current levels. 


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