Retail

J.C. Penney Down 20% in the Past Week

JCP-logo
courtesy J.C. Penney Co. Inc.
The wariness about the turnaround at J.C. Penney Co. Inc. (NYSE: JCP) bubbled to the surface again in the past week. The wariness appears to have turned to outright fear as the stock price Tuesday tumbled through its 50-day moving average for the first time since late February. Whatever enthusiasm for a turnaround followed the company’s fourth-quarter earnings report is long gone.

There was no news on the company Tuesday, but options traders were bailing out on call options at the $9 strike price at next Friday’s options expiration date. When is the last time J.C. Penney’s stock saw $9? Just a week ago, on April 7, shares touched $9.01 before closing at $8.88. On April 8, shares closed at $8.92, and the stock’s been on a slide ever since.

The options guys do not appear to be worried at all that J.C. Penney will hit the $9 level any time soon. The only way to lose by selling a call option now is to have the stock close above $9 a share next Friday. It could happen, but there is absolutely no reason to expect that it will.

So investors are following options trader and getting out. Shares have sunk more than 7% at the noon hour on Tuesday to trade at $7.05, and the pace of the decline has been picking up. The stock’s 52-week range is $4.90 to $19.63.

Here is what the chart looks like:

JCP chart 4-15-14
StockCharts.com

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