Five Below Passes the Polygraph: Ride the Momentum With These Options
The stock has been on a huge run and that is not likely to to end anytime soon. Here's the options trade.
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When trying to discover a strong option play, an important item to look for, obviously, is the option flow. When money is flowing to calls or we see put selling there is no other reason to believe that trader/investor is bullish.
As Jim Cramer likes to say, "volume is like a polygraph test, you cannot lie through it." Indeed, but when flow is minor or open interest is very small then we have to use other means to determine a direction.
The chart gives us plenty of good information about a trend and where a stock may be headed. For a name such as Five Below (FIVE) , the technicals are extremely bullish, and even the fundamentals have improved substantially.
I like to use the IBD (Investors Business Daily) stock checkup tool to find out how healthy a stock really is using those two areas (fundamentals and technicals).
The tool is comprehensive and uses several metrics in determining direction. A rating scale of 1-99 is the basis used for the stock checkup, and with its fine readings it is no surprise the Five Below is rated 97, better than 97% of the stocks in the universe. That's impressive for a retailer, but the proof is in the pudding.
As for an options trade, the open interest is quite low. Anyone who owns many shares of FIVE is not looking to sell them and market makers are not interested in making a market for options, but that does not mean an opportunity is lost. While open interest is scant, we can certainly ride the momentum wave of the stock, which was up 79% in 2025.
The March 200 calls present an interesting chance to ride this wave. These expire after the next earnings report and are the highest level of open interest in this series. The call trades at $17-18, which is about 9% of the stock price. A move up to $220-230 in the next 6-8 weeks would make these calls valuable. That's a good two months for this one to make its move.
Take a look at the montage of options in the chart below.
