Options Bulls See More Upside for Surging Capri Stock

Call buying has been popular on CPRI in recent months

Mar 1, 2019 at 1:18 PM
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Capri Holdings Ltd (NYSE:CPRI) stock is hot today, after Jefferies added the Michael Kors parent to its "Franchise Picks" list. The brokerage firm said it believes the shares could double -- and reiterated its Street-high $89 price target -- on strong long-term pricing power from the retailer's Jimmy Choo and Versace brands. At last check, CPRI stock is up 2.6% at $46.79.

Overall, analysts are split when it comes to the retailer, which officially changed its name to Capri Holdings on the first trading day of 2019. Ten brokerages maintain a "strong buy rating," one a "buy," and 11 a "hold," with not a single "sell" recommendation on the books. However, the average 12-month CPRI price target of $60.92 is a bold 30% premium to the stock's current perch.

Options traders, meanwhile, have been been unusually bullish in recent months, per CPRI's 50-day call/put volume ratio of 7.56 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 93rd annual percentile. In other words, calls have been bought to open over puts at a quicker-than-usual clip.

Today, more than 8,700 CPRI calls have changed hands -- three times what's typically seen at this point. The May 47.50 call is most active, where it looks like speculators may have sold to close their positions earlier. It also seems traders are buying to open the weekly 3/8 47-strike call, with the bulls betting on more upside for the shares through the close next Friday, March 8.

Looking closer at the charts, Capri Holdings stock has been trending higher since its Dec. 24 low at $35.68, up 32%. And while the shares pulled back after an early February earnings-induced bull gap, they found a foothold at their 80-day moving average. Plus, today's pop has CPRI headed for its first close above its 100-day moving average since Sept. 28.

capri stock daily chart march 1


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