Bulls Respond to Target Stock's Upgrade to 'Buy'

TGT is down roughly 26% in 2023

Digital Content Manager
Oct 12, 2023 at 1:38 PM
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BofA Global Research upgraded Target Corp (NYSE:TGT) stock to "buy" from "neutral" earlier, with the brokerage noting margins could improve as traffic increases and the holiday season spurs promotions. Lower transportation costs and decreased inventories could also bring tailwinds.

Target stock was last seen up 1.3% to trade at $110.33, as it further removes itself from its Oct. 6, three-year low of $102.95. The 20-day moving average is still capping price action for the security, which has amassed a 26% deficit for 2023.

TGT 20 Day

Call volume is already running at nearly double the intraday average, with 25,000 calls exchanged so far today, compared to 12,000 puts. Most popular is the October 111 call, where positions are being opened. It's also worth noting that the top five open interest strikes are call heavy.

This marks a dramatic shift in sentiment. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 1.48 sits higher than 99% of readings from the past year. In other words, long puts have been more popular than usual lately.

Target stock sports attractively priced premiums at the moment, too. This is per its Schaeffer's Volatility Index (SVI) of 31% that sits in the 17th percentile of its annual range, indicating options traders are pricing in relatively low volatility expectations.

 

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