TPR is benefiting from rival Capri Holding’s downfall
Tapestry Inc (NYSE:TPR) stock was last seen up 12.8% to trade at $57.81, leading the S&P 500 Index (SPX) today. The retail stock, which is behind luxury brands Coach, Kate Spade, as well as Stuart Weitzman, is enjoying the Federal Trade Commission’s (FTC) blockage of rival Capri Holding’s (CPRI) $8.5 billion merger deal. TPR now boasts an 86.7% year-over-year lead, and is trading at its highest level since November 2013.
Better yet, TPR’s peak comes amid low implied volatility (IV) — a combination that usually precedes tailwinds. Per Schaeffer’s Senior Quantitative Analyst Rocky White, there were four times in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer’s Volatility Index (SVI) sat in the 20th percentile of its annual range or lower. This is now the case with the equity’s SVI of 27%, which sits in the low 20th percentile of its 12-month range.
White’s data shows just one month after these signals, Tapestry stock was higher 75% of the time, averaging a 7.4% pop for that time period. From its current perch, a move of similar magnitude would place TPR above $62.
Short-term options traders lean bearish. This is per the stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.08 that stands higher than 86% of readings from the past 12 months. An unwinding of this pessimism could keep tailwinds blowing for TPR in the coming weeks.