Schaeffer's Trading Floor Blog

Biggest Movers: Dendreon Corporation, Dollar General Corp, and GrubHub Inc

DNDN, DG, and GRUB are making big moves in Friday's trading

by 6/27/2014 1:57 PM
Stocks quoted in this article:

With the last full trading week of June coming to an end, biotech firm Dendreon Corporation (NASDAQ:DNDN), discount retailer Dollar General Corp. (NYSE:DG), and mobile takeout service GrubHub Inc (NYSE:GRUB). Here's a quick roundup of how this trio of names is performing on the charts so far.

DNDN fell as far south as $2.18 in the first half of the session, and was last seen trading 2.2% lower at $2.25. From a broader technical perspective, the shares have lost more than a quarter of their value over the past three months, and in return, have attracted a significant amount of bearish attention. At present, 27.8% of the stock's available float is sold short, representing more than four weeks' worth of pent-up buying demand, at the shares' average daily volume. Elsewhere, however, Dendreon Corporation has racked up a top-heavy 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 21.56, which ranks higher than 92% of comparable readings taken in the past 12 months. Simply stated, calls have been bought to open over puts at a near-annual-high clip recently, and short sellers -- hedging against a potential breakout -- may have contributed to this acceleration of long call activity.

DG has plunged 7.2% today to linger near $57.28, after CEO Rick Dreiling announced plans to retire next year, casting doubt on Carl Icahn's proposal to merge the company with Family Dollar Stores, Inc. (NYSE:FDO). Meanwhile, overall options volume on Dollar General Corp has jumped to five times what is typically seen at this time in the day, with a healthy number of speculators apparently betting on limited upside for the shares in the short term. From a broader standpoint, calls have been the contracts of choice among DG options expiring within the next three months. In fact, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.13 ranks in the bottom 1% of its 12-month range, demonstrating short-term call open interest (relative to put open interest) is at a near-annual-high level.

GRUB ran as high as $36.43 around midday, but has since pared some of its gains, currently trending 2% higher at $35.33. Over the past two reporting periods, short interest on GrubHub Inc increased by roughly 12%, and these bearish bets now make up 6.9% of the equity's available float. It would take more than a week to cover these shorted shares, at the stock's average daily volume. As such, an extension of GRUB's upward trajectory could lead to a short-squeeze scenario, and potentially add fuel to the shares' fire.

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