Call Traders Target Gap Stock on the Dip

Calls are running at double their intraday average

Deputy Editor
Jun 28, 2021 at 1:06 PM
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The shares of Gap Inc (NYSE:GPS) are down 2.9% to trade at $33 at last check. The security looks to be testing its footing at the 30-day moving average, which helped guide GPS to a six-year high of $37.63 in late May, before turning into a ceiling for the shares for most of June. Plus, the stock appears to have found a floor at the $31 level this month. Year-to-date, the equity is up 63.5%. 

GPS 0628

The options pits have been much more bearish than usual lately, per GPS' 10-day put/call volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 96% of readings from the past year, indicating a much stronger-than-usual penchant for long puts. 

Today, however, some of this pessimism could be starting to unwind. So far, 18,000 calls have crossed the tape, which is double the intraday average. The weekly 7/9 35.50-strike call is the most popular, followed by the 33 call in the same series, with positions being opened at both.

It looks like the perfect time to weigh in on Gap stock's next move with options, too. The stock's Schaeffer's Volatility Index (SVI) of 41% sits lowest percentile of readings in its annual range, implying that options players are pricing in relatively low volatility expectations at the moment. 



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