Discount Retail Stock Sporting Technical Support

Discount retailer Dollar Tree Inc (NASDAQ:DLTR) has support in place at its 20-day moving average, a trendline that helped contain a pullback from a 3.6% post-earnings gain earlier this month. This level has held as support, and coincides with areas that previously held amid August highs.

The $120 area nearby is also home to a large open interest peak and could serve as options-related support in the event of any additional pullbacks. Short sellers have had enough, with bearish bets down 9% in the most recent reporting period. Yet with 8% of the stock's total available float sold short, an unwinding of more bearish positions could send DLTR higher.

 

That unwind could also happen via options; per DLTR's Schaeffer's put/call open interest ratio (SOIR) sitting at a put-dominant 1.17

 

Our recommended March call has a leverage ratio of 6.5 and will double on a 16% rise in the underlying equity.