Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



7 Luxury Stocks Expected to Reverse, According to Options Traders

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

For most of us, the current economic conditions reflect a pretty sorry state of affairs. But apparently, the worst of times for some is also the best of times for others ...

While the average American was happy just to be employed, earned wages on the uppermost end of the salary spectrum saw a five-fold increase last year. Even as the rest of the country struggles to keep to keep their heads above water, the very wealthy continue to prosper.

Of course, with mid-term elections just around the corner, a Democrat win would almost certainly mean higher taxes for this income bracket. But this won't necessarily make much of a difference. For one, even if the Dems' proposed hikes pass, taxation still won't be at 1990s levels -- and the rich certainly didn't stop spending then.

And what's more, the anticipation of a tax increase could spur even more spending on luxury items in the short-term.

In other words, luxury spending might be able to keep pace with higher earnings, no matter what the electoral outcome.

That's not what some options traders are thinking. We created a universe of luxury stocks, and scanned the options market to find out what traders think of these names.

Surprisingly, most luxury stocks had Put/Call ratio above 1.0, meaning that there are more open put option contracts on these stocks than call option contracts (i.e., bearish options market sentiment).

That seems to be consistent with the projections of U.S. consultancy Bain & Co. The company predicts growth in the luxury sector will slow next year to 3%-5% after a 10% rebound in 2010.

Bain said it expected growth in the luxury sector to slow down as the basis for comparison became higher and currency fluctuations could hamper tourist flows.

Options traders seem to think that luxury spending is about to decline -- what do you think? Here is a list of seven luxury stocks with bearish options market sentiment. (Click here to access free, interactive tools to analyze these ideas.)

Options data sourced from Schaeffer's. The list has been sorted by the Put/Call ratio.

Luxury Company

Call Option Open Interest (No.  Contracts)

Put Option Open Interest (No.  Contracts)

Put/Call Ratio

Luxottica Group (NYSE: LUX  )




Polo Ralph Lauren (NYSE: RL  )




Nordstrom (NYSE: JWN  )




Coach (NYSE: COH  )




Saks (NYSE: SKS  )




Phillips-Van Heusen (NYSE: PVH  )




Tiffany & Co. (NYSE: TIF  )




Interactive Chart: Press Play to see how analyst opinion has changed on all these stocks over the last two years.

Disclosure: Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Coach is a Motley Fool Stock Advisor pick. The Fool owns shares of Coach. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1346705, ~/Articles/ArticleHandler.aspx, 10/27/2016 5:17:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 8 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:04 PM
COH $35.72 Up +0.07 +0.20%
Coach CAPS Rating: ****
JWN $54.03 Down -0.11 -0.20%
Nordstrom CAPS Rating: ****
LUX $48.18 Down -0.12 -0.25%
Luxottica Group CAPS Rating: ***
PVH $105.57 Up +0.04 +0.04%
Phillips-Van Heuse… CAPS Rating: ****
RL $98.05 Up +0.23 +0.24%
Ralph Lauren Corp CAPS Rating: ***
SKS.DL2 $0.00 Down +0.00 +0.00%
Saks, Inc. CAPS Rating: *
TIF $73.55 Up +0.16 +0.22%
Tiffany and Co. CAPS Rating: **