After more than doubling from July to their early February peak of $69.75, the shares of Michael Kors (KORS) took a brief respite, consolidating in the $60-$64 area. However, KORS stock is now back within striking distance of new three-year highs, and a recent options signal could suggest now is the time to buy near-term calls.
Specifically, KORS just popped up on our list of high-flying stocks with relatively inexpensive short-term options. The equity is within 2% of a new 52-week high, while simultaneously sporting a Schaeffer’s Volatility Index (SVI) in the bottom 20% of its annual range, which indicates that near-term options are pricing in relatively low volatility expectations. Right now, KORS’ SVI stands at 26.2% — higher than just 8.7% of all other readings from the past year.
The last and only other time KORS stock appeared on this list — cultivated by Schaeffer’s Senior Quantitative Analyst Rocky White — the shares went on to rally 9.58% over the subsequent month. At last check, the equity was trading around $66.03; another 9.58% surge would put it in the $72.36 vicinity — territory not charted since early 2015.
Further, KORS sports a Schaeffer’s Volatility Scorecard (SVS) of 90 (out of 100). This indicates the stock has handily exceeded options traders’ volatility expectations during the past year — another attractive factoid for would-be premium buyers.
Despite the retail stock’s long-term ascent, though, analysts remain unconvinced. Just six of 19 brokerage firms following KORS deem it worthy of a “buy” or better endorsement. Should the security extend its recent breakout, a round of upgrades could lure more buyers to the table.
Speculators expecting more upside from KORS shares in the near term could pick up the May 65 call for $2.70 (the current ask price). Buyers of this call would profit the higher the underlying security rallies north of $67.70 (strike plus premium paid) before the options expire on Friday, May 18. If KORS remains below the strike through the options’ lifetime, the most the buyers would lose is the initial premium paid for the calls.