Unusual options activity in Gap Inc. shares surged to 33,570 contracts by early afternoon on Aug. 26, as traders positioned for a significant move following the retailer’s upcoming earnings release after hours on Aug. 27.
Call options accounted for 60% of the volume at 20,328 contracts, while put options totaled 13,242. The most active strikes included Aug. 28 $23, $23.50, and $24 calls, each with 1,500 contracts traded. Open interest was concentrated in the Sept. 18 $24 call with 7,448 contracts and the Sept. 4 $21 put with 6,437 contracts. Trading interest spanned call strikes from $23 to $24 and put strikes from $17 to $19.
Gap’s stock rose 6.02% to $21.36 on Aug. 26, closing near the midpoint of its 52-week range of $18.11 to $29.36. The 3-month implied volatility fell to 49.57%, down 0.86 percentage points, while the volatility skew eased to 1.45 percentage points. Realized volatility over the past 90 days stood at 48.8%.
Analysts maintained a cautiously optimistic outlook. The mean price target among 18 analysts was $25.58, with a consensus rating of 2.25 (Buy). InvestingPro’s fair value estimate was $24.62, implying 15.1% upside. Goldman Sachs kept its Buy rating but trimmed its target to $25 on Aug. 20. Gap also offers a dividend of $0.175 per share, yielding 2.4% as of Aug. 11.
Earnings are forecast at $0.49 per share on $3.7 billion in revenue, with the release scheduled for after hours on Aug. 27.
