Schaeffer's Top Stock Picks for '25

Option Bears Pile On as DSW Inc. (DSW) Nosedives on Earnings

DSW Inc. (DSW) hit a five-year low, after the retailer whiffed on earnings and lowered its outlook

May 24, 2016 at 11:43 AM
facebook X logo linkedin


DSW Inc. (NYSE:DSW) is fresh off a five-year low of $18.51, after the shoe retailer tanked in the earnings confessional and slashed its full-year outlook. The gap lower has sent intraday options volume rocketing to 23 times the normal rate. Looking more closely, it seems at least one group of DSW options traders foresees even lower lows for the stock in the near future.

Specifically, buy-to-open activity is detected at the out-of-the-money June 17.50 put. By purchasing these positions, options traders anticipate DSW will breach $17.50 by front-month expiration, at the close on Friday, June 17 -- something that hasn't been done since early 2011.

This is more of the same for DSW. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), put buyers have been on the prowl. Specifically, the retail stock's 10-day put/call volume ratio of 0.84 outranks 77% of comparable readings from the last year. Likewise, DSW's Schaeffer's put/call open interest ratio (SOIR) of 1.25 registers in the put-skewed 88th percentile of its annual range.

Elsewhere, short interest has been diving, and the stock is currently on the short-sale restricted list. Nonetheless, over 9% of DSW's float remains sold short, translating into one week's worth of activity, based on the stock's typical trading levels. Also in the shares' bearish corner are analysts, with 10 of 14 sporting "hold" or worse recommendations.

As alluded to, DSW Inc. (NYSE:DSW) has had a disastrous morning. At last check, the retail stock was down 14.6% at $18.55, even as the broader market surges. And unlike this fellow retailer, DSW shows no signs of an intraday rebound.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.

 
 

You have the chance to join one of Bernie's most exclusive programs, complete access at HUGE savings!

As we prepare for a new administration to take the reins in Washington, the near-term market landscape is rife with uncertainty.

The Federal Reserve has already hinted at the turbulence ahead, lowering its interest rate outlook for 2025.

Meanwhile, breakthroughs in artificial intelligence (AI), quantum computing, and other transformative sectors have unlocked incredible profit potential.

But these opportunities are fleeting, and timing is everything. That's where Quick-Hit Trader comes in.

Quick-Hit Trader is designed for precision and speed, getting you in and out of the market in a flash. While other investors scramble to navigate volatile conditions, you'll have access to expertly curated trades that leverage these rapid shifts to deliver explosive profits in short order.

This is your chance to capitalize on the fast-moving market like never before. Are you ready to make your move?