Put buying has picked up recently with GME stock
There's been notable options volume lately on retailers Dillard's, Inc. (NYSE:DDS) and GameStop Corp. (NYSE:GME). Here's a quick look at how options traders have been placing their bets on DDS and GME stocks.
The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.
Put Traders Lining Up Around Dillard's Stock
Dillard's stock is down 7% to trade at $56.06, a 33% drop from its July 31 high of $83.44. DDS suffered an earnings-induced bear gap earlier this month and has since been fighting to reclaim its 50-day moving average. Analysts are skeptical, as all four brokerages covering DDS shares rate them a "sell" or worse.
In the options pits, traders have been favoring puts on an absolute basis. Specifically, more than 42,684 puts have been traded in the past 10 days, compared to 23,100 calls. This is reinforced by DDS' Schaeffer's put/call open interest ratio (SOIR) of 1.14, which ranks in the 76th percentile of its annual range.
The good news for Dillard's traders is that stock has shown it can be profitable for speculators. That is, the equity's Schaeffer's Volatility Scorecard (SVS) sits at a high 84, indicating the stock has tended to exceed option traders' volatility expectations during the past year.
Options Traders Take on GameStop Ahead Of Earnings
GameStop stock is set to report quarterly earnings after the close today. The video game retailer has averaged a one-day move in either direction of 6.9% in the session following its last eight earnings releases. Furthermore, this move has been negative seven of the last eight times, including a 5.9% drop back in May. This time around, the options market is pricing in a 4.3% swing for tomorrow's trading.
GameStop is currently up 1.4% to trade at $21.77. The shares have shed 30% year-over-year, and have seen their 100-day moving average stifle several breakout attempts along the way. Analysts remain cautious. Of the 10 brokerages covering GME stock, six rate it a "hold" or worse.
Short interest for the security is at 28.12 million shares, its highest point since October. This accounts for 28% of the stock's total available float, and would take more than two weeks for the shorts to fully cover their positions.
In the options pits, 46,690 GME puts have been traded in the past 10 days, compared to just 35,591 calls. In addition GME has a 50-day put/call volume ratio of 3.80 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the 95th percentile of its annual range. Said differently, put buying has been unusually popular over the past 10 weeks.