Stocks quoted in this article:
Since hitting a record peak of $257.56 on Sept. 11, LinkedIn Corp (NYSE:LNKD) has been consolidating around its 20-day moving average. This trendline has provided support during a number of recent pullbacks (including one in early September), and appears poised to do so again. In spite of this, speculators have been upping their put presence in LNKD's options pits, as they bet on additional downside, or maybe, protect their portfolios against such a scenario.
Jumping right in… At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.12 ranks in the 96th percentile of its annual range. Simply stated, puts have been bought to open over calls at a near-annual-high clip throughout the past two weeks. Expanding the time frame out to 10 weeks shows more of the same. Specifically, the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.82 ranks 6 percentage points from a 52-week peak.
Echoing this trend is LinkedIn's Schaeffer's put/call open interest ratio (SOIR). Since the beginning of the month, LNKD's SOIR has moved to 1.14 from 0.98, as near-term put open interest grew 33.4%. The current ratio ranks higher than 96% of similar readings taken over the past year, suggesting short-term speculators are more put-heavy than usual.
In the soon-to-be front-month series, put players have shown particular attention to the October 220 and 225 strikes, where a respective 1,256 and 1,353 contracts reside. Given LNKD's impressive technical showing in 2013, it could be that a portion of these deep out-of-the-money puts have been bought to open by shareholders as options-related insurance. Now appears to be an opportune time to do so, as LNKD's Schaeffer's Volatility Index (SVI) of 30% ranks lower than 94% of similar reading taken in the past year. In other words, premium on the stock's short-term options is relatively inexpensive at the moment.
As touched upon, LNKD has had a stellar run on the charts in 2013, with the shares up more than 112%. As a point of comparison, the broader S&P 500 Index (SPX) has tacked on a more modest (although still impressive) 20.3% in that same time frame. However, sentiment outside of the options pits remains mixed. On the investor front, short interest accounts for 3.2% of LinkedIn's float, which translates into 2.94 million shares sold short. This is the lowest level of shorted LNKD shares since October 2011.
Among the brokerage bunch, 17 covering analysts maintain a "buy" or better recommendation toward LinkedIn Corp (NYSE:LNKD), compared to 11 tepid "holds" and not a single "sell." Meanwhile, the consensus 12-month price target of $246.77 represents upside of just 1.3% to the stock's current perch at $243.64. While there is little in the way of sideline cash available from the shorts to help fuel LNKD's fire, a round of upgrades and/or price-target hikes from analysts could entice buyers to the table.