Bullish Bettors Should Consider this Luxury Fashion Stock

It’s also worth noting that there is decent put OI residing at the March 42.50-strike

Feb 28, 2023 at 12:42 PM

The shares of Tapestry Inc (NYSE:TPR) recently pulled back to their 50-day moving average, which is four times their $10.50 low in 2020 and 1.5 times their September 2022 low. What’s more, this trendline coincides with the equity’s March 2022 peak, as well as the round $10 billion market cap. This dip follows a gap higher earlier this month, after the luxury retailer’s fiscal second-quarter earnings report, making now an opportune time buy TPR calls.

It’s also worth noting that there is decent put open interest (OI) residing at the March 42.50-strike. Plus, the security is currently trading around the $42 region, while the $40 level is roughly half its all-time high.

Shorts are in covering mode, after short interest hit a more than two-year high in October. However, short interest still sits 20% above last year’s low, indicating there is plenty of pessimism left to unwind, which could boost the shares.

Our recommended May call has a leverage ratio of 5.0, and will double in value on an 18.7% pop in the underlying equity.

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