Guess? Options Volume Explodes on C-Suite Shake-Up

GES options pits are typically quiet

Jan 28, 2019 at 11:30 AM
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The shares of Guess?, Inc. (NYSE:GES) are spiraling today on news Victor Herrero is stepping down as the retailer's CEO. Co-founder and Chairman of the Board Maurice Marciano will step in on an interim basis until Carlos Alberini -- who formerly served as GES' chief operating officer from 2000 through 2010, and is currently head of Lucky Brand -- takes over as the new CEO. At last check, GES stock was down 15.7% at $18.91, set for its biggest one-day drop since May 31.

In reaction, activity is accelerated in the stock's typically quiet options pits. While volume is still light on an absolute basis, the 549 calls and 742 puts traded so far nearly triples the average daily volume of 484 options. For the sake of comparison, Guess stock's single-day options volume hit an annual high of 14,211 contracts traded back on March 21.

One trader appears to be betting on additional losses for the retail stock, and apparently bought to open a block of March 15 puts for 15 cents apiece, making breakeven at the close on Friday, March 15, $14.85 (strike less premium paid). Elsewhere, new positions are being initiated at the March 20 call, with call buyers eyeing a short-term bounce and call sellers setting a near-term ceiling at the strike price.

Elsewhere on Wall Street, some traders are likely kicking rocks that they missed out on this bear gap. Short interest on Guess? stock is down 31.2% since the Dec. 1 reporting period to 3.72 million shares -- the fewest since October 2011.

Looking closer at the charts, GES stock has shed 29.2% since hitting a four-year peak of $26.95 on Aug. 30. While the shares are on track today to close below their 320-day moving average for the first time since Dec. 24, they are finding a foothold near $18.90-19.00 -- a region that coincides with the equity's late-March bull gap, and has cushioned pullbacks in the past 10 months.

guess stock daily chart jan 28


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