Diageo Options Turn Bullish Into Thursday's Print

DEO heads into its October 29 results with the options market sending an unusually bullish signal, the most striking positioning shift ahead of the print.

Call demand has surged relative to puts in recent weeks. The put/call ratio has dropped to 0.52, more than two standard deviations below its 20-day average of 0.68, and close to the lowest reading of the past year (52-week low: 0.47). The shift has been rapid: through early October the ratio sat comfortably above 0.70, then fell sharply as the earnings date approached. That kind of call-heavy positioning into a results release reflects genuine conviction among options buyers, not just routine hedging activity being unwound.

The broader backdrop helps explain why sentiment has turned. Diageo shares have gained nearly 10% over the past month to $95.97, recovering ground lost earlier in the year. TD Cowen upgraded the stock to Buy in June, lifting its target to $93, a signal that at least part of the Street was already positioning for a rerating. Bank of America has maintained a Buy but trimmed its target from $117 to $109 in late 2025, reflecting caution on the growth trajectory even as the constructive view held. The bull case rests on premium brand resilience and a potential recovery in key emerging markets, particularly China. Bears point to the sluggish organic growth record and a demanding EV/EBITDA multiple above 35x for a business where volume momentum has been hard to sustain.

Short positioning offers little support for the bear case. Short interest fell roughly 17% over the past month and has edged lower again this week. Borrowing costs, at 1.26%, are modest and have dropped sharply over the week after a brief mid-October spike to around 2.8%. Borrow availability has loosened considerably: after touching near-zero in mid-October (a brief episode where almost every share in the lending pool was lent out), availability has rebounded to 63%, a far more comfortable level that removes any squeeze dynamic from the equation.

The print will therefore test whether Diageo's recent share price recovery is backed by a genuine improvement in trading conditions, or whether the options market's call-heavy positioning has run ahead of what the company actually delivers on organic volume and margin.