Target Options Bull Makes a Well-Timed Bet

Call buying has been popular on TGT recently

by Karee Venema

Published on Oct 8, 2019 at 11:08 AM

Target Corporation (NYSE:TGT) is running hot today, on news the retailer partnered with Tru Kids -- owner of the Toys 'R' Us brand. Specifically, shoppers who visit to browse toys will be redirected to Target's website once they click "buy." A new "strong buy" rating at Raymond James is only fueling the tailwinds, with TGT stock up 0.6% to trade at $108.57.

This burst higher is good news for one options trader, who placed a well-timed bullish bet on Monday. Amid heavy trading yesterday, one speculator bought to open TGT's weekly 10/11 110-strike call for an average price of $0.47, according to Trade-Alert. Thanks to today's pop, the bid price on this short-term option was last seen at $0.71, meaning the call buyer is already looking at a paper profit.

Call volume is quick again this morning, too, with more than 7,700 contracts on the tape already -- 1.9 times what's typically seen at this point. The weekly 10/11 110-strike call is most active once again, followed by the October 109 call. Buy-to-open activity has been detected at each strike, meaning traders are betting on even more near-term upside for the retail stock.

This week's rush toward bullish bets just echoes a wider trend seen in Target's options pits. At the International Securities Exchange (IS), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 20-day call/put volume ratio is perched at a top-heavy 1.13. Drilling down, the October 115 strike is home to peak call open interest in the front-month series, with data confirming notable buy-to-open activity here.

The highest TGT stock ever traded was $110.94, tagged on Sept. 6. Since then, the shares have pulled back to test support at their rising 30-day moving average, and just below here is the psychologically significant 40-day trendline. Year-to-date, Target shares have surged 64.5%, thanks in part to an earnings-related bull gap in late August.

tgt stock daily price chart on oct 8


The best of Schaeffer's market analysis in a 5-minute weekly read.



NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories

The Latest Investor's Guide to Precious Metals
Learn how to protect savings and maximize returns by investing in precious metals.
Boeing Headwinds Hit SPR; Healthcare Stock Falls on CEO Exit
Looking at three of the worst stocks in today's trading
2 Analysts Praise Chipotle Stock Before Earnings
CMG has added 96% in 2019 already
16-Hour "Jump Trades" Unlock New Profit Potential
Click to continue to advertiser's site.