Options Traders Expect Big Post-Earnings Moves for This Beauty Stock

Schaeffer's Research2022-08-25

Ulta Beauty, Inc. is the largest beauty retailer in the United States. ULTA offers both high-end and low-end cosmetics, fragrances, nail products, bath and body products, beauty tools, skin care products, and haircare products, as well as salon services at their retail stores. The equity is slated to report second-quarter earnings after the close on Thursday, August 25. At last glance, ULTA is trading up 2.8% at $412.50.

The makeup retailer has seen a dismal post-earnings response, closing lower after five of its past eight quarterly reports. However, the equity did manage a 12.5% surge following its late-May report, and this time around options traders are pricing in an 8.8% move for Friday's trading, regardless of direction.

Ulta Beauty stock has increased about 10% year-over-year and ULTA is currently trading up 24% since bottoming at $330.80 near the end of May. However, shares of ULTA have dropped 1% year-to-date and are down 6% since reaching an all-time high of $438.63 in April. ULTA trades at a forward price-earnings ratio of 21.83 and a price-sales ratio of 2.41.

Options traders have been quite bullish lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security sports a 10-day call/put volume ratio of 1.52, which sits higher than 95% of readings from the past year. This implies calls are much more popular than usual.

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