The weekly 5/22 27-strike put is running the show today
The shares of Foot Locker Inc (NYSE:FL) are near the bottom of the New York Stock Exchange (NYSE) today, last seen down 12.8% at $25.30. The sneaker retailer reported a first-quarter loss that exceeded Wall Street estimates, while revenue also missed its mark. The culprit, of course, is the store closures wrought from the COVID-19 pandemic. In response to the nightmarish report, options traders are coming out in droves.
At last check, over 13,000 options have crossed the tape -- four times the intraday average, with puts nearly doubling the number of calls. A deeper dive shows most of this activity is centered around the weekly 5/22 27-strike put, where new positions are being sold to open. If this is the case, those options traders are banking on a quick bounce-back from FL by next Friday, when the options expire.
The preference for puts is nothing new. This is per FL's 10-day put/call volume ratio of at the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that sits in the 89th percentile of its annual range. Echoing this, Foot Locker's Schaeffer's put/call open interest ratio (SOIR) of 1.21 is higher than all but 8% of readings from the last year, implying short-term options traders have rarely been more put-biased.
On the charts, Foot Locker stock has now taken a 34.3% haircut in 2020. The shares still maintain a 16% lead for the quarter, but ran head-first into resistance at their 100-day moving average. For contextual purposes though, FL remains a distance from its March 23, nine-year low of $17.46.
