Option Bears Pile On Suffering Nordstrom Stock

The equity is approaching decade lows

Deputy Editor
May 29, 2020 at 2:40 PM
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After receiving receiving no fewer than three price-target cuts -- most notably a $2 slash to $16 from Deutsche Bank -- due in part to substantial first-quarter losses, the shares of Nordstrom, Inc. (NYSE:JWN) are plummeting. At last check, the stock is down 11.2% at $16.10, and on its way to once again close below its 50-day moving average -- a trendline that, save for the last two closes, has acted as a level of resistance for the past three months. Now just a chip-shot away from its April 3 low of $12.27, JWN is down 60% year-to-date. 

JWN Chart May 29

As such, analysts are approaching Nordstrom stock with caution. Of the 14 covering the security, 13 sport a tepid "hold," or worse. However, with a consensus 12-month price target that's a 30.4% premium to current levels, JWN looks ripe for another round of price-target cuts.

Today's drop has options bears coming out of the woodwork. So far today, 29,000 puts have crossed the tape -- a staggering eight times the average intraday volume, and just over double the number of calls traded. Most popular is the June 12.50 put, where positions are being opened. This bearish behavior implies traders are betting on more downside ahead for JWN, by the time these contracts expire. 

This penchant for bearish bets, however, seems out of the norm. In the last 10 days, 7,907 calls exchanged hands, compared to 6,732 puts. What's more, short-term traders have yet to pile on the bearish bandwagon according to JWN's Schaeffer's put/call open interest ratio (SOIR) of 0.67, which sits in the low 13th percentile of its annual range. This indicates that short-term traders have rarely been more call-biased during the past year.

 

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