Kohl's Stock Slipping Ahead of Earnings

Options traders are chiming in ahead of the event

Deputy Editor

Nov 17, 2021 at 3:18 PM

Kohl's Corporation (NYSE:KSS) is continuing this week's flood of retail earnings, with its third-quarter report due out before the open tomorrow, Nov. 18. Analysts are expecting profits of 64 cents per share, and the options pits are pricing in a 13.1% post-earnings swing for KSS -- outpacing the average post-earnings move of 9.3% from the last two years. Looking back, the stock has only finished three of its last eight next-day sessions higher, including a 7.3% rise this past August, though the affects of Covid-19 on the retail sector should be factored into those numbers.

KSS is moving lower ahead of the event, down 4.4% to trade at $55.73 at last glance. However, underlying support at the recently reclaimed 200-day moving average is looking to keep these losses in check. Longer term, the $60 level has kept a ceiling on two rally attempts since a post-earnings bear gap in May.

KSS Nov17

Analysts are leaning bearish on Kohl's stock, with five of the nine in coverage carrying a "hold" or worse rating, and four a "strong buy." Meanwhile, short interest makes up a healthy 11.8% of the security's available float, or five days' worth of pent-up buying power.

Options traders, on the other hand, have been more bullish than usual. This is per KSS' 50-day call/put volume ratio of 2.48 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 91% of readings from the past year. This means long calls have picked up at a much faster-than-usual rate during the last 10 weeks.

Today, however, options bears are picking up their momentum, though calls are still winning out on an absolute basis. So far, 17,000 calls and 15,000 puts have crossed the tape, with puts being picked up at five times what's typically seen at this point. The November 55 put is the most popular, with positions being bought to open there. This means plenty of options traders are expecting KSS to move lower by the contract's expiration at the end of this week.

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