Home Depot (HD) Options Signal Call-Dominated Bullish Bias: Target $435 Breakout Amid Oversold RSI and Strategic Acquisitions

• The Home Depot (HD) trades at $407.66, up 0.05% with volume at 242K shares, amid a short-term bearish trend and long-term range-bound structure.
• Options data reveals a call-heavy open interest (OI) skew, with 3,216 contracts at the $435 strike (Friday expiry) and a put/call OI ratio of 0.78, signaling aggressive bullish positioning.
• RSI at 33.5 and Bollinger Bands suggest oversold conditions, with the stock trading near the lower band ($402.68) and 30D support at $407.34.

Call-Dominated OI and Sentiment Imbalance: A Bullish Catalyst or Overextended Risk?

The options market for HD is sharply skewed toward bullish bets, with the top OTM call strike at $435 (OI: 3,216) dominating Friday’s expiry. This level represents a 6.7% premium to the current price, suggesting significant conviction in a potential breakout. The next-largest call strikes at $417.50 (OI: 1,904) and $415 (OI: 1,122) further reinforce a multi-tiered bullish setup. In contrast, put OI is concentrated at $405 (OI: 700) and $400 (OI: 619), indicating limited downside protection demand. The 0.78 put/call OI ratio (calls: 129.5K, puts: 101.3K) underscores a structural imbalance favoring upside. However, the MACD histogram (-2.45) and RSI (33.5) suggest the stock may be due for a rebound, but traders should monitor the 200D MA at $383.22 as a critical support level. No block trades are reported, reducing the likelihood of large institutional moves.

Strategic Acquisitions and Earnings Beat Fuel Long-Term Optimism, But Short-Term Volatility Lingers

Recent news highlights HD’s $5.5B acquisition of GMS Inc., which strengthens its supply chain for professional contractors, and Q2 2025 earnings that exceeded expectations ($3.15 EPS, $35.2B revenue). JPMorgan and Zacks analysts have positioned HD as a 2026 retail play, citing its resilience in home improvement and alignment with lower interest rates. However, the stock’s recent underperformance in sales growth and a bearish comparison to Lowe’s (LOW) in Investopedia’s analysis introduce near-term headwinds. The Halloween product launch and Behr’s 2026 color announcement may drive seasonal demand, but investors should balance these positives with the RSI’s oversold reading and the 30D MA at $410.88 acting as a near-term resistance.

Actionable Trade Ideas: Calls on $435 Breakout, Stock Buy at 30D Support

For options traders, the $435 call (Friday expiry) offers a high-conviction play if HD breaks above the upper Bollinger Band ($426.12). The strike’s 3,216 OI suggests liquidity and implied volatility support. Alternatively, the $425 call (next Friday expiry) with 3,084 OI provides a slightly safer entry if the stock consolidates. For stock traders, consider entry near $407.34 (30D support) with a stop-loss below $405.84 (intraday low). A bullish breakout above $410.88 (30D MA) could target $425, aligning with the 200D MA and next Friday’s top call strike. A bearish play could involve the $400 put (next Friday expiry) if the stock fails to hold above $405.84.

Volatility on the Horizon: Balancing Short-Term Bearish Momentum and Long-Term Bullish Fundamentals

HD’s technicals and options data present a mixed but actionable narrative. The short-term bearish trend and oversold RSI suggest a near-term rebound, but the call-heavy OI and strategic acquisitions point to a longer-term bullish bias. Traders should prioritize the $435 call as a high-reward trade while hedging with the $400 put. Investors with a 6–12 month horizon may find HD’s valuation (P/E in line with peers) and dividend sustainability attractive, especially as lower rates could boost home improvement demand. However, monitor the 200D MA and 30D support levels for early signs of trend reversal.