Stitch Fix Stock Rally Attracts Heavy Options Trading

KeyBanc thinks SFIX stock can rally to $38

Jul 10, 2018 at 11:22 AM
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Options are active for Stitch Fix Inc (NASDAQ:SFIX) as the AI-powered fashion stock rallies to record highs. SFIX shares earlier peaked at $34.71, and were last seen trading up 8.3% at $33.69, after KeyBanc began coverage with an "overweight" rating and ambitious $38 price target. The firm's analyst called out Stitch Fix's use of customer data as advantage over competitors, and expects the company to continue taking market share in its core women's market. Elsewhere, the company just launched its Stitch Fix Kids product.

This marks the third straight session SFIX has touched a fresh all-time high, which is likely good news for recent options traders. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows more than 5,000 calls have been bought to open during the past 10 days, compared to just 835 puts. Peak open interest currently resides at the December 32, where most positions were seemingly bought to open.

In today's trading, puts and calls are both trading well above the pace expected, with overall options volume pacing for an annual high. The July 33 and 35 calls are seeing heavy trading, as is the July 29 put. Most of the action at this latter contract took place at the bid price, however, hinting at potential sell-to-open activity. If that's the case, traders see the $29 level as potential support. For what it's worth, this price point is exactly two times the equity's all-time low.

The most popular options contracts today, however, are the September 29 put and 40 call. Two-thousand of each crossed simultaneously just moments ago, with data hinting at some type of synthetic short strategy. In other words, at least one options trader may be speculating on a sharp retreat from SFIX stock.

sfix stock price

 

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