FL has traded in a tight range during the summer months
The shares of Foot Locker, Inc. (NYSE:FL) are down 3% at $27.54 this afternoon, on track for its fifth straight loss. The slide comes just a few days ahead of the company's second-quarter earnings report, due before the open on Friday, August 21. Below, we will take a look at how the stock has performed on the charts of late, and explore some of the options activity surrounding FL ahead of the event.
Digging deeper, the equity has recovered fairly well from its mid-March, nine-year lows below the $18 level. Despite a 39% 2020 deficit, the summer months have seen FL trade in a tight range between the $26.50 and $30 levels, with its 100-day moving average emerging as support.
Analysts aren't particularly optimistic toward the equity. Of the 17 in coverage, just five sport a "buy" or better rating. Meanwhile, the stock's 12-month consensus target price of $32.27 is a 17.2% premium to current levels, suggesting a storm of bear notes could be in order should the company's corporate report disappoint.
There is, however, some optimism in the options pits, where calls are handily outpacing puts. In fact, Foot Locker stock sports a 10-day call/put volume ratio of 4.04 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the slightly elevated 82nd percentile of its annual range. This suggests a healthier-than-usual appetite for long calls at the moment.
A look at the equity's history of post-earnings reactions over the past two years shows a series of lackluster responses. In its last eight reports, five of these next-day sessions were lower, including an 18.9% slide in August 2018 and a 16% drop in May 2019. The security averaged a post-earnings swing of 10.5% the last eight quarters, regardless of direction. This time around, the options market is pricing in a similar move of 12.4%.