L Brands Stock Eyes Best Day in 10 Years

The Victoria's Secret parent reported strong earnings

Shares of Victoria's Secret parent L Brands Inc (NYSE:LB) have gapped 14% higher to trade at $24.50, after the retailer reported a first-quarter earnings beat, driven by Bath & Body Works sales. The company also hiked the lower end of its full-year guidance. LB is on pace for its best day since October 2008.

Today's impressive gains come as a relief to shareholders, as L Brands stock just yesterday hit a nearly nine-year low of $21.47, and closed on a year-to-date deficit of 16%. Even with today's win, the shares remain 75% below their 2015 record highs, and remain 4% lower for the month of May.

In light of the retailer's solid earnings showing, J.P. Morgan Securities upped its price target to $26 from $24. Analyst attention was leaning bearish coming into today, with 13 of 18 covering firms sporting "hold" or "sell" recommendations. This does, however, contradict the the stock's average 12-month price target of $29.38, which represents a 19% premium to current levels.

Ahead of earnings, near-term options traders were more put-heavy than usual. LB's Schaeffer's put/call open interest ratio (SOIR) stands at 1.89, meaning put open interest nearly doubles call open interest among options set to expire in three months or less. Further, this ratio is higher than 92% of all other readings from the past year.

Today, however, calls are dominating. LB has already seen more than 10,000 calls traded in the first hour of the session -- nine times its average intraday call volume, and nearly double the number of puts exchanged. It looks like some speculators are betting on more upside for the shares this week, with the weekly 5/24 22.50-strike call attracting notable attention.