Options Bears, Analysts Pile On Tiffany Stock

TIF options activity is elevated today

Managing Editor
Jul 18, 2019 at 2:18 PM
facebook twitter linkedin


On Monday, Tiffany & Co. (NYSE:TIF) was hit with a downgrade from Citi. Today, the luxury retailer received another bear note, this time from Wells Fargo, which trimmed its price target to $88 from $90. The analyst in coverage warned that Tiffany's "domestic business has historically decelerated in election years," and said political tensions with China and a stronger U.S. dollar could weigh on tourist sales. As such, Wells Fargo also cut its earnings estimates for the retailer's second quarter and full-year.

TIF's typically quiet options pits have sprung to life today. More specifically, TIF has seen almost 3,200 put options change hands today -- 1.8 times what's typically seen at this point, and three times the number of calls traded. Most of this action is centered around the November 75 put, although its unclear if the options were bought or sold. Those buying the puts to open are banking on a sharp pullback from TIF in the coming months, while those writing them see the $75 level as a long-term floor. 

Regardless of motive, near-term options are attractively priced right now. The security's Schaeffer's Volatility Index (SVI) of 23% sits in just the 11th percentile of its annual range. This means short-term options are pricing in relatively low volatility expectations for TIF.

Plus, the equity's Schaeffer's Volatility Scorecard (SVS) sits at a lofty 85 (out of a possible 100), indicating that Tiffany stock has tended to exceed option traders' volatility options during the past year. 

Tiffany stock last breached the $75 level back on Christmas Eve, when the shares touched a two-year low of $73.13. A rally from there ensued, but was quickly rejected by the shares' 320-day moving average back in late April and early May. Since then, TIF has spent the past few weeks consolidating above the $90 level, and was last seen trading at $92.65, down 0.7% on the day.

Daily Stock Chart Tiffany


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners