Overstock.com Stock Drops Alongside Revenue

Overstock.com sees Q3 revenue declining

Shares of Overstock.com Inc (NASDAQ:OSTK), rebranded as Bed Bath & Beyond, were last seen down 25.1% at $20.54 and earlier hit a nearly three-month low after a disappointing online revenue update.

The company, which acquired some of bankrupted Bed Bath & Beyond’s intellectual property assets in June, said it sees the unit’s third-quarter online revenue decline in the mid-teen percentage range year-over-year. Launched on Aug. 1, Overstock.com now takes customers directly to Bed Bath & Beyond’s website, which CEO Jonathan Johnson said is seeing more traffic. 

On the charts, OSTK looks set to close below the $21 level for the first time since June. What’s more, the equity is trading well beneath its 240-day moving average, a former layer of resistance that served as a safety net on a closing basis in June and during August’s pullback. Year to date, Overstock.com stock maintains a 6.5% lead.

OSTK Chart September 62023

It looks as though options traders believe this pullback could serve as a floor for the stock, as 27,000 calls have traded hands so far today; however, 11,000 puts have also been exchanged, for total options volume that’s eight times what’s typically seen at this point. The January 2024 30-strike call is the most active contract, while new positions are also being opened at the monthly September 20 call.

Bullish bets were already popular ahead of today. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), OSTK’s 10-day call/put volume ratio of 20.38 ranks higher than all other readings from the past year. 

Premium can be had for a bargain right now, per Overstock.com’s Schaeffer’s Volatility Index (SVI) of 62% that ranks in the relatively low 20th percentile of annual readings. This means options traders are pricing in lower-than-usual volatility expectations.

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