Pessimists Keep Their Eye On Michael Kors Holdings Limited

Michael Kors Holdings Ltd (KORS) saw a rush of short-term put buying on Friday

Digital Content Group
Jan 5, 2015 at 10:55 AM
facebook twitter linkedin

Michael Kors Holdings Ltd (NYSE:KORS) is a long-term technical laggard, shedding more than one-quarter of its value since hitting a record high of $101.04 in late February to trade at $73.63. In Friday's options pits, traders wagered on additional downside for shares of the upscale accessories designer.

Taking a quick step back, KORS puts outstripped calls by a healthy margin during Friday's session, and the equity's 30-day at-the-money implied volatility spiked 10.5% to 31%, signaling elevated demand for short-term strikes. Along those lines, traders bought to open the January 2015 70.50-strike put -- the stock's most active option -- anticipating the shares will breach $70.50 by next Friday's close, when the front-month contracts expire.

This preference for bearish bets over bullish is business as usual for KORS. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security has racked up a 10-day put/call volume ratio of 1.27 -- higher than 76% of all other readings from the last year.

However, some optimism remains among covering analysts. Specifically, seven out of 19 brokerage firms have handed out "buy" or better ratings, and the stock's consensus 12-month price target of $92.63 stands in territory not charted since mid-June. This leaves the door wide open for a potential round of downgrades and/or price-target cuts, which could exacerbate selling pressure on Michael Kors Holdings Ltd (NYSE:KORS).


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

Schaeffer's Investment Research Master Portfolio Trial


Special Offers from Schaeffer's Trading Partners