With the SPY lower on Monday, and further red continuing through Friday, bearishness was the theme of the week. Within that red is a deeper pessimism towards retail, which is now in earnings season with Macy’s, $M, and Nordstrom, $JWN, having reported on Wednesday and Thursday, respectively. Both names were tagged by put sweepers before their substantial post earnings moves down, and the bears are now aimed at Target, $TGT, which reports next week.
For $M, both Volume and Open Interest dominated on the put side, with the 11/13 $45.5 Put’s volume being the most notable strike, followed by the $46. The following chart of the 11/13 $M $45.5 Put tells you everything you need to know about the market’s reaction to their earnings:
Similar gains can be seen in the the monthly November $JWN $62.65 Puts, seen below:
$TGT reports earnings next Wednesday, and continuous bearish steam has been flagged in the name over the past few weeks. The most notable action of today is a sweep for this month’s $TGT Nov15 $70.5 Puts, a $512k bet (the contracts purchased for $2.08 each). The put volume and open interest over several strikes in the November monthly has been substantial, and completely dwarfs the call activity:
On top of the market weakness, retail could move further red after poor reports this week from $M, $JWN, and others. Sentiment is clear, so be ready and position yourself for more big moves.
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