Market Insights

Kohl’s has been under pressure for years, and one big trader may see further downside into next month.

Check out this unusual options activity in the retailer:

• Roughly 15,000 23-August 20 puts were sold for $0.44.
• A matching number of September 19 puts were bought for $1.28.

Volume was below open interest in the 20 puts but not the 19s. That may suggest an existing position was closed at the higher strike and rolled lower.

Puts fix the level where a security can be sold, so they can gain value when prices fall. They can also become worthless if a stock is above the strike price on expiration.

The trader probably entered Tuesday’s session owning the 23-August 20 puts, which expire this Friday. He or she apparently exited that position and moved their capital to the September 19s. Making the adjustment provided an additional four weeks for a potential move, giving exposure to the next quarterly report on August 28. It cost a net $0.84.

KSS fell 1.2 percent to $19.73 yesterday and is down 31 percent this year. The department-store owner has struggled as U.S. shopping patterns shift toward lower prices and online channels. It plunged on May 30 after earnings and revenue missed estimates. The move continued a long-term series of lower highs since early 2022.

Some chart watchers may notice that the 50-day moving average crossed below the 200-day MA in June. That “death cross” is a potential signal of a longer-term downtrend.

Overall option volume in KSS was about 4 times the average over the last month, according to TradeStation data. Puts accounted for a bearish 80 percent of the total.

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