Manufacturing its iconic brand of plastic clogs, Crocs (NASDAQ:CROX) shares are up over 9% heading into the early afternoon session. Loop Capital upgraded CROX stock to “buy” from “hold.” Should the forecast prove accurate, the footwear specialist could be one of the winners of 2022.
Interestingly, Loop Capital has maintained its $75 price target. Based on today’s opening price of $48.10, fulfilling the forecast would yield a 56% return. Further, the investment research firm cited “encouraging checks” that suggest market sentiment has become overly negative. Seemingly, according to this thesis, investors are ignoring the potential involved with Crocs’ acquisition of casual footwear brand Hey Dude.
Naturally, the analyst upgrade has many folks talking excitedly about CROX stock. What particularly stands out for the footwear company is the picture of contrasts. While CROX is up 9%, the benchmark S&P 500 index is down 1.2% on Tuesday.
Better yet, the options market suggests more bullishness is on the way for Crocs.
Betting Heavily on CROX Stock
According to Shaeffer’s Investment Research, options traders have been wagering on the footwear company for some time. “In the past two weeks, 4.40 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than 96% of readings from the past year, showing calls being picked up at a much faster-than-usual clip.”
Further, the implied volatility for the $52.50 call options with an expiration date of July 15, 2022 is currently at 77.85%. Historically, the volatility rating for CROX stock options is 73.32%, suggesting that demand for near-the-money bullish wagers is rising.
If anything, Schaeffer’s Investment Research states that the options route may be a “decent” way to go should you wish to participate in the latest swing in CROX stock.
Why It Matters
Whether wagers on CROX stock meet your particular risk-reward profile, the fundamental reality is that strong bullishness against a dour environment for the major indices is significant. Data from the prior week indicated that consumer sentiment hit multi-year lows, implying that households would prefer to seek shelter rather than bet on volatile equities.
Yet the swing up in CROX stock suggests that at least some investors believe negative forecasts about the consumer economy could be too pessimistic. If so, moving against the grain could yield substantial returns, though it’s still a very risky bet.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.