AEP Options Turn Bullish as Short Interest Pulls Back Before Wednesday Print

American Electric Power reports Q3 results Wednesday morning with short sellers retreating and options positioning rotating toward calls, a notable shift from the more defensive setup documented in articles published earlier this week.

Short interest has fallen to 27.7 million shares, 5.2% of the free float, down 6.4% over the past week and 3.7% in the most recent session alone. That is a meaningful step back from the mid-October peak above 29.6 million shares. The borrow market is uncongested. Cost to borrow ticked up 26% over the week to 0.44%, but remains low in absolute terms. Availability has drifted slightly tighter but is still running close to 986% of short interest, meaning roughly nine shares remain available for every one borrowed. There is no squeeze pressure in the lending pool.

Options positioning has shifted clearly toward calls ahead of the print. The put/call ratio has dropped to 0.54, more than a standard deviation below its 20-day average of 0.65 and close to the lowest reading of the past year. That compares with a PCR above 0.80 just three weeks ago. Options traders have rotated from downside protection to upside positioning as the stock climbed 9.2% over the past month to $129.22.

Analyst opinion remains split, with the divergence defining the pre-earnings debate. HSBC initiated coverage with a Buy and a $145.90 target on October 22, the same day Jefferies trimmed its target by $2 to $146 while keeping Buy. Morgan Stanley raised its target to $130 from $128 on October 21, sticking with Overweight. JPMorgan went the other way, cutting to $135 from $140 while holding Neutral. The consensus mean target of $141.50 sits about 9.5% above the current price. The bull case rests on 24GW of new load agreements secured through 2030, much of it tied to data centre demand, and a $70 billion capital expenditure plan. Bears point to a funds-from-operations to debt ratio of 13.2%, below the company's own 14% to 15% target range, and ongoing coal exposure that creates regulatory and financing risk.

The stock moved in the same direction as its closest peers over the past week, rising 3.6% against a median gain of roughly 3.7% for names such as OGE, EVRG and LNT. At both the July 2026 print and the one before it, AEP fell on the day and extended losses over the following five days. Wednesday's result will test whether the combination of reduced short positioning and bullish options flow reflects genuine conviction in the load-growth story, or simply reflects a positioning flush ahead of numbers that the bear camp still views as financially stretched.