Macy's Inc (M) Option Bulls Undeterred by Bearish Note

Macy's Inc's (M) October and November 36 calls are seeing buy-to-open activity

Oct 14, 2016 at 3:10 PM
facebook X logo linkedin


Macy's Inc (NYSE:M) is getting mowed down today, losing 3.5% to trade at $35.53. J.P. Morgan Securities is turning up the heat on retail stocks, and for M, this has meant a price-target cut to $40 from $44 -- with the brokerage firm expecting third-quarter same-store sales to fall. Despite the selling pressure, options traders appear to be setting their sights higher.

Currently, M call options are being exchanged at twice the usual intraday rate. The 36 strike is very popular, with buy-to-open activity detected in both the October and November series, according to Trade-Alert. By purchasing the near-the-money calls, traders are counting on the underlying to rebound above $36 by the respective expiration dates, at the close next Friday and Friday, Nov. 18.

Short-term calls have been popular for a while now. In fact, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.35 indicates calls nearly triple puts among options expiring in the next three months. Plus, this SOIR ranks in the call-skewed 6th annual percentile.

No matter the motive, now is a great time to purchase premium on short-term strikes. M's Schaeffer's Volatility Index (SVI) checks in at 30%, lower than 89% of all readings from the past year. Not to mention, the Schaeffer's Volatility Scorecard (SVS) of 95 suggests the stock has tended to make bigger-than-expected moves in the last 12 months, relative to what the options market has priced in.

Turning to the charts, Macy's Inc (NYSE:M) is currently clinging to a year-to-date lead of less than 2%. Looking more closely, given today's losses, the shares have more or less closed their bullish gap from the company's August earnings report.

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.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI