HDS Heads Higher on Quarterly Beat

Calls have been popular in the options pits

Deputy Editor
Sep 9, 2020 at 2:52 PM
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The shares of HD Supply Holdings Inc (NASDAQ:HDS) are up 6.3% at $41.77 at last check, after announcing a better-than-anticipated second-quarter report, with both earnings and revenue higher than analyst expectations. The industrial company neglected to provide third-quarter or full-year guidance. 

Today's pop has HDS shooting above its 10-day moving average, a familiar ceiling of resistance in recent weeks. Now up 3.7% year-to-date, the equity is eyeing its first weekly win in the last four. 

HDS Sep 9

On the analyst front, five of the 12 in coverage carry a "buy" or better rating on the stock, while the remaining seven linger at a lukewarm "hold." Meanwhile, the 12-month consensus price target of $43.25, near HD Supply stock's annual August 11 high of $43.37, is a chip shot away from current levels. 

The options pits are looking much more bullish, with 27.41 calls bought for every put in the past 10 weeks at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than all but 1% of readings from the past year, meaning long calls have rarely been picked up at this rate. 

Today is more the same, albeit with 2.3 times the usual daily options volume. So far, 1,349 calls and 162 puts have crossed the tape, the most popular being the September 40 and 42.50 calls. This means that quite a few traders are betting on more upside for HDS by the end of next week. 



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