American Eagle Outfitters Inc (NYSE:AEO) stock is soaring today, up 31.5% at $17.91 at last glance, after the retailer posted better-than-expected second-quarter earnings of 45 cents per share on revenue of $1.28 billion. The company attributed the sales boost to its controversial Sydney Sweeney ad campaign, with CEO Jay Schottenstein touting "record-breaking new customer acquisition and brand awareness cutting across age demographics and genders." No fewer than five analysts lifted their price targets after the event.
Today's bull gap has American Eagle stock headed for its largest single-day percentage gain ever -- a wild feat for a stock that began trading over 30 years ago. Now trading at its highest levels since December, the equity is up 8.8% year to date, but still down 10% year over year.
Naturally, options traders are chiming in on AEO today. So far, 103,000 calls and 37,000 puts have been exchanged, which is already 11 times the average daily options volume. The September 19 call is the most popular by far, followed by the 17 call in the same series. New positions are also being opened at the weekly 9/5 18-strike call.
Some of today's price action could be attributed to short covering, as short interest represents 17.8% of the stock's available float. It would take shorts 2.5 days to cover their bets, at AEO's average pace of trading.
