Outperforming Retail Stock Sports Attractive Options

WSM could also benefit from a short squeeze

Jul 17, 2018 at 9:59 AM
facebook twitter linkedin


Home furnishings retailer Williams-Sonoma, Inc. (NYSE:WSM) blasted higher back in late May thanks to an earnings release that was met with widespread positivity across Wall Street -- though, still, not a single analyst recommends buying the stock. With WSM consolidating atop the supportive, round-number $60 mark and sporting a year-over-year advance of roughly 35%, traders have a chance to get behind the underloved winner before its next move higher.

180713wsm

Aside from a round of much-deserved analyst upgrades, WSM could benefit from a short squeeze situation, considering about one-fourth of the total float is held by these bears. Based on average daily trading volumes, it'd take these short sellers two weeks to cover, pointing to plenty of buying power that could come in and keep the wind at the equity's back.

The unusually strong put-skew among short-term options traders could help buoy the shares on the charts. Specifically, Williams-Sonoma has a Schaeffer's put/call open interest ratio (SOIR) of 2.36, which ranks in the 83rd annual percentile. In short, speculators targeting options expiring within three months are much more put-heavy than what's normally seen.

WSM options are pricing in reasonable volatility expectations at the moment, as well. This is going by its Schaeffer's Volatility Index (SVI) of 33%, ranking in the 14th annual percentile.

Subscribers to Schaeffer's Weekend Trader Series options recommendation service received this WSM commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.
 

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 Stock Pick Report
 


 


 
Special Offers from Schaeffer's Trading Partners