SCHW heads into its July 21 earnings report with the most bullish options posture it has shown all year and the Street raising targets on the morning of publication.
The clearest signal this week is the sharp reversal in options sentiment. The put/call ratio has dropped to 0.92 — well below its 20-day average of 1.01 and just above the 52-week low of 0.86. That marks a dramatic shift from early June, when the PCR briefly hit 1.46, the highest defensive reading of the past year. Traders who were loading up on downside protection six weeks ago have largely stepped aside. The z-score of -0.76 confirms the move is meaningful relative to recent history, not just noise.
The lending market tells the same unworried story. Borrow availability is effectively unconstrained — the availability pool relative to short interest is running at 9,999%, meaning there is no meaningful pressure on the borrow side. Short interest is just 1.1% of the free float, and that number has been falling: it dropped roughly 6% over the past week as the stock climbed 10.5% to close at $101.93. Cost to borrow did tick up 34% on the week to 0.49%, but in absolute terms that remains negligible for a name of this size. The ORTEX short score of 29.0 sits in the low range, consistent with a stock where bears are not making a strong stand.
The Street is moving constructively into the print. UBS raised its target to $122 this morning while maintaining its Buy rating — a notable fresh vote of confidence. The consensus mean target is $116.84, implying roughly 15% upside from current levels. Analyst moves in recent months have generally been upward: Barclays, Raymond James, and TD Cowen all lifted targets in May, and JPMorgan raised to $131 in April. Morgan Stanley remains Overweight despite trimming its target twice in April, landing at $125. The bull case centres on Schwab's self-help earnings recovery as expensive wholesale borrowings roll off, with management confident client cash behaviour is stickier than competitors' AI-driven alternatives suggest. The bear case is more nuanced than outright negative — it acknowledges double-digit earnings growth potential but flags execution risk around funding offsets and any slowdown in daily average trades. On valuation, the stock trades at roughly 13.7x earnings and 3.2x book — multiples that have expanded modestly over the past month as the price recovered.
The institutional holder list adds a meaningful sidebar. The Charles & Helen Schwab Living Trust holds almost 49.9 million shares — nearly 2.9% of the company — and it added 1.1 million shares in its most recent reported period. That contrasts with Charles Schwab himself selling approximately $15 million worth of stock in May. CEO Rick Wurster went the other direction: he bought 21,959 shares for roughly $1.85 million on May 28, when the stock was trading in the low-to-mid $80s. That purchase, made at a price roughly 20% below current levels, is the most substantive recent insider signal in the data. JP Morgan Asset Management also added 5.3 million shares in the period to June 30, a sizeable incremental commitment from a major institutional allocator.
Recent earnings reactions have been mixed. The last four prints produced day-one moves of +0.04%, -0.32%, -3.5%, and -8.0% respectively. The -8% read was the most damaging, arriving in April, and it was followed by an 11.3% five-day loss. The July 21 release therefore matters: the stock has recovered strongly from those lows, and what the market is really watching is whether net interest income guidance has firmed and whether wholesale funding costs are rolling off fast enough to validate the recovery in the share price. Peer wealth managers AMP and LPLA both gained 13-14% on the week, suggesting sector tailwinds are genuine rather than idiosyncratic to Schwab.
With two weeks until the print, the setup to watch is whether the options market holds its newly bullish posture or reverts toward put protection as the date approaches — that shift, if it comes, would be the most informative near-term read on how institutional traders are positioning for the release.
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