Lowe's, Home Depot Draw in Frenzied Put Traders

Home Depot Inc (NYSE:HD) announced a first-quarter earnings and revenue miss this morning, with comparable sales falling a much wider-than-expected 4.5%. The blue-chip concern also cut its annual sales forecast, as inflation squeezes consumers and softens demand for tools and building materials.

Last seen down 1.7% at $283.47, Home Depot stock is pacing for its fourth loss in five sessions. Shares are down 10.2% year-to-date, and breached a floor at the $284 level earlier to trade at their lowest level since October. Looming overhead for months has been the 200-day moving average.

Options traders are in a frenzy. So far today, 106,000 calls and 60,000 calls have been exchanged, or six times the intraday average volume. Most popular is the May 280 put, where new positions are being opened. 

Home Depot's dismal quarter is weighing on rival Lowe's Companies Inc (NYSE:LOW) as well. The equity is down 1.4% to trade at $198.55 at last glance, and earlier fell to its lowest level since late March. Though today's dip places it on track for its fifth-straight daily loss, year-over-year LOW is clinging to a small lead.

Bears are also targeting LOW, with 15,000 puts exchanged -- double what's typically seen at this point -- compared to 7,093 calls. The May 200 put is now the most active contract.

Lowe's first-quarter results are due out before the open on Tuesday, May 23. The equity usually fares well post-earnings, finishing five of its last eight next-day sessions higher, including a 9.6% pop in August 2021. The stock averaged a move of 3.2% during the past two years, regardless of direction, but this time the options pits are pricing in a much bigger-than-usual move of 6.6%.