Schaeffer's Trading Floor Blog

Stocks to Watch Wednesday: Yelp Inc, Rackspace Hosting, Inc., and TASER International, Inc.

Analyzing YELP, RAX, and TASR ahead of tomorrow's trading

by 3/25/2014 4:49 PM
Stocks quoted in this article:

Momentum names that made notable moves on Tuesday and could continue to do so into Wednesday's session include online review forum Yelp Inc (NYSE:YELP), cloud computing name Rackspace Hosting, Inc. (NYSE:RAX), and stun-gun maker TASER International, Inc. (NASDAQ:TASR). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Yelp Inc (NYSE:YELP)

Despite scoring bullish brokerage notes yesterday, Yelp Inc today extended its recent technical woes, which have plagued the stock for nearly three weeks now. To be specific, the shares plunged 2.7% today to close at $78.96, which is 22.4% below their all-time high of $101.75, tagged on March 5. Meanwhile, in the options pits, speculators traded YELP contracts at a rate that more than doubled the daily norm. The most popular option of the day was the weekly 5/2 70-strike put. It appears speculators were placing a short-term floor on Yelp Inc's retreat at this strike, as a significant number of contracts may have been sold to open here.

Rackspace Hosting, Inc. (NYSE:RAX)

Rackspace Hosting shot 3.5% higher today to close at $33.86, after receiving an upgrade to "overweight" from "equal weight" at Morgan Stanley this morning. While the equity maintains a six-month deficit of 36.3%, it seems as though today's positive price action inspired a healthy number of speculators to sell to open contracts at the weekly 3/28 35-strike put. In other words, these put writers expect RAX to climb atop the $35 mark through this Friday's close, when the options expire.

TASER International, Inc. (NASDAQ:TASR)

TASER finished today's session with a 5.9% gain to land at $18.91, extending its year-over-year advance to nearly 136%. Given the stock's long-term technical success, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open almost 11 calls for every put during the past 20 trading days, resulting in a call/put volume ratio of 10.79. However, it is possible that some of this call activity is actually the work of short sellers hedging against additional upside on TASR. Over the past two reporting periods, short interest spiked 21.4%, and now accounts for 6.8% of the equity's available float.

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