Promising Retail Stock for Options Bulls to Check Out

The stock's technical setup looks strong

Jun 23, 2021 at 1:59 PM
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The shares of popular sports retailer Dick's Sporting Goods Inc (NYSE:DKS) are fresh off a post-earnings bull gap, after which the stock scored a June 14 record high of $102.33. Though the equity has since dipped from that peak, support at the 50-day moving average and $90 level have swooped in to catch the stock's pullback. Plus, potential resistance from overhead June calls will no longer be a headwind, with the options expiring today. With these technical layers of support in place, it looks like a good time to bet on DKS adding to its 65% year-to-date gain.
dks jun 23

Despite the security's recent rally, there is still plenty of room for upgrades amongst the brokerage bunch. Of the 18 analysts in coverage, eight carry a "hold" or worse rating on DKS. Plus, short interest has been slow covering since last July, and makes up 18% of the stock's available float. In other words, it would take nearly seven days to buy back these bearish bets, at the equity’s average pace of trading.
DKS is seeing attractively priced premiums at the moment, per the stock's Schaeffer's Volatility Index (SVI) of 34%, which sits in just the 4th percentile of its annual range. Furthermore, Dick's Sporting Goods stock's Schaeffer's Volatility Scorecard (SVS) sits at a relatively high 85 out of 100, meaning the stock has exceeded options traders' volatility expectations during the past year. Lastly, our recommended call has a leverage ratio of 6.1, and will double in value on a rise of 16.7% in the underlying security.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this DKS commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.


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