The major retail stock's recent peak comes amid historically low implied volatility
The shares of Target Corporation (NYSE: TGT) are up 1.6% to trade at $154.37 this afternoon, while already enjoying a 45.2% year-over-year lead, with additional support from the 40-day moving average. And while the equity just hit an all-time-high of $156.10 on Aug. 20, a historic bull signal now flashing could indicate even more upside for the TGT over the next few weeks.
More specifically, the stock's recent peak comes amid historically low implied volatility (IV), which has been a bullish combination for Target stock in the past. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times in the past five years when the stock was trading within 2% of a 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with the TGT's current SVI of 28.2%, which sits slightly above the 12th percentile of its 12-month range. The data shows the security was higher a month later, averaging a return of 2.6% for that time period. From its current perch, a move of similar magnitude would put TGT just above the $158 mark, at yet another record peak.
Analysts are mostly optimistic toward Target stock, with 11 of the 17 in coverage sporting a "strong buy" rating, and the remaining six carrying a tepid "hold" or worse. This means there is still some room for upgrades moving forward, which could push the security even higher.
This upbeat sentiment is echoed in the options pits, where calls are all the rage. TGT sports a 50-day call/put volume ratio of 2.55 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 92nd percentile of its annual range. This suggests a healthier-than-usual appetite for bullish bets of late.