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Are Options Traders Betting on a Big Move in PVH Corp. (PVH) Stock?
September 05, 2017

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Investors in PVH Corp. (PVH - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the Sep 5th 2017 $70.00 Put had some of the highest implied volatility of all equity options today.

What is Implied Volatility?

Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.

What do the Analysts Think?

Clearly, options traders are pricing in a big move for PVH Corp shares, but what is the fundamental picture for the company? Currently, PVH Corp is a Zacks Rank #2 (Buy) in the Textile - Apparel industry that ranks in the Top 40% of our Zacks Industry Rank. Over the last 60 days, the current quarter Zacks Consensus Estimate has seen four upward versus no downward revisions. The net effect has been taken by the Zacks Consensus Estimate going to $2.91 from $2.76 in that period.

Given the way analysts feel about PVH Corp right now, this huge implied volatility could mean there’s a trade developing. Often times, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.

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