Speculative players are taking sides on mass discounter Groupon Inc (NASDAQ:GRPN), tech concern EMC Corporation (NYSE:EMC) and stun-gun manufacturer TASER International, Inc. (NASDAQ:TASR), according to data from the major options exchanges. More specifically, traders are buying calls on the stocks at a rapid-fire rate. Here's a closer look at recent option activity on these three securities.
Groupon Inc (NASDAQ:GRPN)
During the past five days, options traders on the International Securities Exchange (ISE) have bought to open 9,552 calls on GRPN, compared to fewer than 200 puts -- resulting in a call/put volume ratio of 54.27. This ratio is among the top 25 on the exchange, underscoring the heavy call skew of late.
Broadening that to include data from the Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX) (and expanding the scope to two weeks), GRPN sports a 10-day call/put volume ratio of 8.73. Compared to similar readings of the past year, this ratio registers in the 88th percentile, suggesting option buyers have been scooping up GRPN calls over puts at a much faster-than-usual clip.
As a result, GRPN's Schaeffer's put/call open interest ratio (SOIR) rests at 0.38 -- just 2 percentage points shy of an annual nadir. In simpler terms, short-term options players have rarely been more call-biased during the past year. Furthermore, those near-term contracts are relatively inexpensive right now, as evidenced by GRPN's Schaeffer's Volatility Index (SVI) of 53% -- just 6 percentage points from a 12-month low.
However, not everyone on Wall Street is high on GRPN. Just four out of 21 analysts consider the stock worthy of a "buy" or better rating, and the consensus 12-month price target on the security stands at $11.47. From GRPN's current price of $11.07, that price target represents expected upside of just 3.6%.
On the charts, Groupon has been outstanding, more than doubling in 2013. Off the charts, the company has flexed some fundamental muscle recently, announcing the purchase of Madrid-based Blink Booking.
Should GRPN continue to thrive, a flood of upgrades and/or price-target hikes could translate into contrarian fuel for the shares' fire.
EMC Corporation (NYSE:EMC)
EMC also made the list of biggest five-day call/put ratios on the ISE, with 50.96 calls bought to open for every put. However, the equity's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.87 ranks in the 89th percentile of its annual range, implying that the longer-term trend is still toward long puts over calls.
Likewise, the stock's SOIR of 1.13 stands higher than 85% of all other readings of the last year, suggesting near-term option traders are more put-skewed than usual. In the front-month series, the deep out-of-the-money September 20 put is most popular, with more than 5,900 contracts in residence. Considering EMC is currently flirting with $27, it's possible those puts were purchased as hedges by wary shareholders.
The recent glut of calls could also signal hedging of another kind. Short interest represents a week's worth of pent-up buying demand, at EMC's average pace of trading. By buying to open calls -- especially of the out-of-the-money sort -- the shorts could be limiting losses in the event of an extended uptrend on the charts.
In any case, now is an opportune time to roll the dice with EMC's near-term options. The stock's SVI of 19% rests in the 14th percentile of its annual range.
TASER International, Inc. (NASDAQ:TASR)
Finally, TASR saw nearly 3,200 calls traded on the CBOE during the past five sessions, compared to just four puts. The resulting call/put ratio of 790.50 ranks No. 2 on the exchange.
The growing affinity for calls merely echoes the longer-term trend, though, as TASR's 50-day ISE/CBOE/PHLX call/put volume ratio of 35.48 stands just 22 percentage points from a 52-week peak.
During the past two weeks, the stock's out-of-the-money September 15 call has been most popular, with roughly 2,500 contracts added. The 12.50 strike remains home to peak call open interest in the front-month series, though, with nearly 7,600 contracts outstanding.
Technically speaking, TASR has rallied more than 136% during the past year, and touched a new five-year high of $12.68 just last month, after Arizona and Dallas/Fort Worth police adopted the company's on-officer camera systems. From the stock's current perch at $12.35, it would take a surge of 21.5% in order for the aforementioned 15-strike calls to move into the money. As such -- and considering short interest grew 6.8% during the past two reporting periods -- speculators are either gambling on way more short-term upside, or hedging their pessimistic positions.
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