Gap Inc (NYSE:GPS) has received considerable praise in the past week. The company posted strong quarterly earnings, and quite a few analysts came out to support the shares. And, yet, Gap stock has been unable to find any follow-through buying support. With the tenancy for stocks to drift higher on light holiday volume this week, should GPS stock’s lack of upside worry investors?

As Laura Hoy recently said, Gap certainly has the wherewithal to survive the retail apocalypse. The company is seeing solid sales growth and same-store sales were up 3% in the most recent quarter, compared to a 1% decline a year ago. Gross margins were also higher, rising 40 basis points to 39.7%.

Analysts emerged in droves to praise the solid report, with KeyBanc, Nomura, and Barclays all lifting their price target on GPS stock. Jefferies even said they expected top-line momentum to continue in a lengthy research note for the shares.

Despite the praise, only four of the 19 analysts following GPS stock rate the shares a “buy” or better, according to Zacks data. Furthermore, the consensus price target, despite the plethora of upgrades, rests at a mere $28.24 — below Gap stock’s current trading range.

Furthermore, short sellers aren’t buying the recent rally in GPS stock either. The number of GPS shares sold short surged by 27% during the most recent reporting period, resulting in nearly 11% of Gap’s stock sold short.

Options traders are equally bearish on GPS stock. Currently, the December put/call open interest ratio rests at a whopping 2.37, with puts more than doubling calls among front-month options.

Click to Enlarge This setup, heavy negativity, strong fundamentals and positive price action is a contrarian’s dream. GPS stock is currently consolidating its earnings pop, as, clearly, the bearish contingent was not prepared for the strong report. However, GPS is up more than 30% since it’s August bottom, and it’s recent upside has pulled its 10-day and 50-day moving averages into a bullish cross.

Follow through and technical buying should be just around the corner as we head into the thick of the holiday buying season.

How high can GPS stock rally? December options implieds are pricing in a potential move of about 5.75% for Gap stock. This puts the upper bound near $31 and the lower bound near $28.

2 Trades for GPS Stock

Call Spread: Traders looking to take advantage of an unwinding of heavy bearish sentiment on GPS stock might want to consider a Dec $30/$31 bull call spread. At last check, this spread was offered at 28 cents, or $28 per pair of contracts. Breakeven lies at $30.28, while a maximum profit of 72 cents, or $72 per pair of contracts — a potential return of about 157% — is possible if GPS stock closes at or above $31 when December options expire.

Put Sell: If the lack of follow through buying concerns you a bit, then a somewhat more conservative put sell play might fight the bill. At last check, the Dec $27 put was bid at 19 cents, or $19 per contracts.

You keep the premium as long as GPS holds about $27 through expiration, but will have to pay $27 per share if assigned should Gap stock trade below $27 ahead of expiration.

As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.