Andrea Kramer (akramer@sir-inc.com) Big Lots, Inc. (BIG) bucked the broad-market trend lower on Tuesday, thanks to an upgrade to "buy" from "neutral" at Buckingham. The analysts noted the discount retailer's encouraging valuation, and predicted same-store sales growth and stronger-than-expected results for the fourth quarter.
By the closing bell, BIG had seen almost 3,800 calls cross the tape ? more than twice the number of BIG puts traded, and triple the security's projected daily call volume. However, upon closer inspection, it appears a healthy portion of the volume was actually attributable to the bears.
The security's out-of-the-money December 35 call saw almost 1,700 contracts change hands ? 75% of which traded at the bid price, suggesting they were sold. Furthermore, call open interest at the front-month strike jumped overnight, pointing to newly opened positions. By writing the 35-strike call to open, the sellers are essentially betting BIG's recent rally will run out of steam before hitting the $35 level.
Sentimentally speaking, however, bearish bets are nothing new for BIG ? at least in the options arena. The stock's Schaeffer's put/call open interest ratio (SOIR) of 2.15 indicates that puts more than double calls among near-term options. What's more, this ratio ranks in the 94th annual percentile, implying that short-term speculators have been more pessimistically positioned toward BIG just 6% of the time during the past year.
Right out of the gate today, the shares of BIG have extended yesterday's run higher, tacking on 0.1% to flirt with the $31.17 level.
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