If you pay attention to business news at all, you know it had an ongoing tussle going on with hedge funder Bill Ackman, who controlled about 18 percent of the company. Well, this past week Ackman apparently tired of the fights with the board about who should be CEO and what direction the company should go. He dumped his 39 million shares for about half the price at which he bought them, racking up a loss of roughly $470 million.
"Clearly people are relieved this block of stock is gone," said Jan Kniffen, head of his equity research firm J Rogers Kniffen. "They must be relieved Bill (Ackman) is gone, and people are clearly buying in. I think long term, it's got to be good for the stock. In the short term, I thought it would be bad, and it's OK. I'm pleasantly surprised at the way the market reacted."
But many traders had been shorting J.C. Penney stock. Some of the market's positive reaction could have simply been traders covering a bet that the stock would continue its months-long march downward. And while traders may not be outright negative anymore, that doesn't mean they are positive on the company's prospects.
"The way it's trading right now, in my opinion, is (it's) trading on the fact that within four to six quarters, the company could be out of business, burn through all its cash and be nothing," Rosecliff Capital's Mike Murphy said on CNBC's "Fast Money: Halftime Report." "I think there's opportunity here if they can reverse that."
Indeed, such trepidation prompted some traders to suggest options strategies rather than straight bets on the stock.
(Learn more: Options trading)
"I really think J.C. Penney is finding a bottom, but for those prudent investors like us here in Chicago, we want to utilize the acronym JCP and just trade options; so 'Just Calls Please' is the way to call the upside," said Jeff Kilburg of KKM Financial, appearing on "Power Lunch." "It gives you an opportunity to hop on. J.C. Penney has to focus on their cash, having the liquidity and cash by the end of the year. They have to get back from injuries. They're still healing from a blown out ACL."
"I think what the market wants to see is ... that there's positive momentum going forward, that it's getting less worse. And that less-worse scenario happened in the second quarter," added Dana Telsey of the Telsey Advisory Group, in an appearance on "Squawk Box." "You need it to happen in the third and fourth quarter."