Kohl's Shares Surge Amid Short Squeeze and Options Trading Frenzy

Kohl's shares more than doubled in value on Tuesday in a frenzied rally fueled by retail investor enthusiasm, surging short interest, and options trading. The stock jumped 87% in early trading, prompting a volatility halt, and became one of the most-traded names across retail brokerage platforms. The rally was driven by traders looking to squeeze out bearish bets, with nearly 49% of its free-floating shares sold short.

Kohl's Corp (KSS.N) shares more than doubled in value on Tuesday, July 22, 2025, in a frenzied rally fueled by retail investor enthusiasm, surging short interest, and options trading. The stock jumped 87% in early trading, prompting a volatility halt, and became one of the most-traded names across retail brokerage platforms. The rally was driven by traders looking to squeeze out bearish bets, with nearly 49% of its free-floating shares sold short [1].

The day started with Kohl's shares opening up about 100% at a 10-month high of $21.23, triggering a trading halt. The stock then paring gains to trade up 39% at $14.48, late in the afternoon. The trading volume exploded to about 183 million shares by 2:20 p.m. ET, about 25 times the stock's 25-day moving average volume [1]. In the options market, Kohl’s made the list of the 10 most actively traded names by volume, with options volume standing at 360,000 contracts, about 12 times its average daily trading volume [1].

Analysts noted that the trading was reminiscent of the price and trading volume surges seen during the 'meme-stock' rally from 2021, when highly shorted retail favorites such as GameStop (GME.N) and AMC Entertainment (AMC.N) experienced similar price surges [1]. Retail investors have remerged as a potent force in markets in recent months, with U.S. stocks overcoming their tariff-induced April swoon to reclaim record highs, even as institutional investors have taken a more cautious approach to piling back into stocks [1].

The short interest in Kohl's shares, at 49%, raised the possibility of a short squeeze, where investors who had sold borrowed shares in the hopes of making money from a share price decline are forced to buy shares to close their losing positions [1]. This scenario can lead to a rapid increase in the stock price as short sellers rush to buy back shares to cover their positions.

While the short squeeze was a significant factor in Tuesday's rally, analysts remain cautious about the stock's long-term prospects. The average one-year price target set by analysts is $7.23, with expectations ranging between $4.00 and $9.00, suggesting a potential downside of 57.05% from the current price of $16.83 [2]. The average brokerage recommendation from 16 firms places Kohl's Corp at a 3.5 rating, correlating to a "Hold" suggestion [2].

Despite the short-term gains, Kohl's has been battling declining sales, executive shakeups, and a recent dividend cut. The retailer's real estate portfolio and cash flow are seen as potential long-term upside catalysts by some contrarians, but Wall Street remains cautious overall [3].

The frenzy over Kohl's stock is not isolated. Other heavily shorted stocks, such as Opendoor Technologies (OPEN.O), also witnessed strong retail interest, with shares up 10% and gaining more than 300% over the past six sessions [1].

The current volatility in Kohl's shares suggests that the meme-fueled momentum could continue in the short term, especially if more shorts are forced to cover. However, history suggests that meme stocks often crash hard once the hype fades, and extreme volatility may continue to disrupt trading [3].

References:
[1] https://www.reuters.com/business/retail-consumer/kohls-shares-jump-retail-traders-drive-meme-stock-like-rally-2025-07-22/
[2] https://www.gurufocus.com/news/2994021/kohls-kss-soars-over-62-amid-short-squeeze
[3] https://m.economictimes.com/news/international/us/kohls-moon-mission-stock-jumps-30-percent-as-reddit-hype-triggers-massive-rally/articleshow/122839851.cms