Macy's reports third-quarter earnings before the open tomorrow, Nov. 14
Earnings season has a strong retail theme to it this week. One of the retail giants due up is Macy's Inc (NYSE:M), which will step into the earnings confessional for its third-quarter report before the open tomorrow, Nov. 14. Ahead of the event -- and a historically bullish period for Macy's -- the stock is down 0.1% today to trade at $36.67, and options traders are anticipating another big post-earnings move.
Digging into its earnings history, M stock has closed higher the day after five of the retailer's previous eight earnings reports, including an 11% burst last November. Overall, the shares have averaged a 10.1% next-day move in the last two years, regardless of direction. This time around, Macy's options are pricing in a 16.7% swing for Wednesday's trading.
Meanwhile, Macy's has been one of the best stocks to own during the upcoming Thanksgiving week, looking at data over the past 10 years. According to Schaeffer's Senior Quantitative Analyst Rocky White, M has averaged a Thanksgiving week gain of 4.93%, and finished the week positive eight times.
A move of similar magnitude could have the stock inching closer to its Aug. 14 two-year high of $41.99 by Black Friday. Macy's stock bounced from its 200-day moving average -- a historically bullish trendline -- back in early October, and is fresh off of a three-week winning streak. In the last 12 months, M has added an impressive 92% gain.
Analysts and short sellers alike share plenty of pessimism, though. Exactly 80% of the brokerages covering M rate it a "hold" or "strong sell." Meanwhile, short interest increased by 5.9% in the most recent reporting period to 44 million shares. This represents 14% of the equity's total available float, and 6.6 times the average daily trading volume.
The skepticism is seen in the options pits, too, where puts have been bought to open over calls at a quicker-than-usual clip. This is according to data out of the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where M's 10-day put/call volume ratio of 1.21 ranks in the 86th annual percentile.
Echoing this, the stock's Schaeffer's put/call open interest ratio (SOIR) stands at a steep 2.05, which arrives in the 84th percentile of its annual range. In other words, speculators are unusually put-biased among options set to expire within three months.