Heavy Put Volume Bets Against Lowe's, But the Math Favors Sellers

More than 6,000 Lowe's Companies (LOW) put option contracts changed hands Tuesday at the $170.00 strike for expiry on Dec. 18, 2026, according to Barchart's Unusual Stock Options Activity report — an unusually heavy bet that the home improvement retailer's shares will fall over the next 87 days.

The wager looks aggressive. LOW traded at $193.84 in midday action on Tuesday, Sept. 22, close to its six-month low of $190.98 reached on Sept. 21. The $170 strike sits 12.4% below the current price.

But the economics of the trade cut both ways. Buyers paid a $3.00 premium per contract, meaning the stock would have to fall to $167 before the puts hold any intrinsic value. That is a 14% decline from Tuesday's price.

That premium creates a different opportunity for sellers. Short-sellers of these puts collect $3.00 on a $170.00 strike, a 1.7647% yield over three months. Even if LOW falls that far and the seller is assigned shares at $170, the breakeven sits at $167.00. An investor who repeats the trade every three months at similar terms could generate an expected annualized return above 5.29%.

The valuation case supports the sellers' side. Analysts project Lowe's will earn $12.32 in earnings per share for the fiscal year ending January 2027 and $13.03 for the year ending January 2028, per the source data. At Tuesday's price, that works out to forward price/earnings ratios of 15.7x and 14.9x, respectively.

Those multiples sit well below Lowe's historical norms. Seeking Alpha reports the stock's five-year average forward P/E at 18.23x, while Morningstar puts it at 17.2x. In 2024 the forward P/E averaged 19.97x, and in 2025 it averaged 18.27x.

The gap between the current multiple and the historical average frames the bull case. If LOW reverts to a 17.7x forward P/E over the long run, the source notes, the stock could rise to a materially higher level than Tuesday's $193.84 print.

Analysts, meanwhile, maintain higher price targets than the options market implies, according to the source — a divergence between the put-heavy positioning and Wall Street's published expectations.

The question for the next quarter is whether the put buyers see deterioration the analysts have not yet priced in, or whether they are paying rich premiums for a decline the fundamentals do not support. With the stock near six-month lows and trading at its cheapest forward multiple in years, the trade suggests at minimum that hedging demand has picked up — and that income-oriented investors can now collect meaningful premium for taking the other side.