It's been noted multiple times how well small-caps have performed of late. This storyline has been supported by the price action of the Russell 2000 (RUT), which has notched a string of record highs in recent weeks. Three names within this sector that could offer up potential contrarian plays for option players are biopharmaceutical concern Halozyme Therapeutics, Inc. (NASDAQ:HALO), home beverage specialist Sodastream International Ltd (NASDAQ:SODA), and packaged food concern Diamond Foods, Inc. (NASDAQ:DMND). As of Wednesday's close, the market capitalizations for these three companies stood at $1.38 billion, $1.26 billion, and $512.50 million, respectively.
Halozyme Therapeutics, Inc. has tacked on an impressive 86% in 2013, yet short interest accounts for nearly one-quarter of the stock's available float, translating into more than a week's worth of pent-up buying demand. Should HALO continue to post gains on the charts, there is plenty of fuel to spark a short-covering rally.
In a similar vein, Sodastream International Ltd has surged 68% during the past 52 weeks. Despite this, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.22 ranks in the 94th percentile of its annual range, pointing to a distinct bearish skew in SODA's options pits. Going forward, an unwinding of these pessimistic positions could help SODA in its trek up the charts.
Finally, Diamond Foods, Inc. has been a technical titan, with the shares boasting a 68% year-to-date advance. Helping usher the stock higher has been its 20-week moving average. This trendline applied pressure to DMND in late 2011 and throughout most of 2012, but seems to have switched to a more supportive role in recent months.
Meanwhile, short interest accounts for roughly one-third of the security's available float, and it would take more than two weeks to cover these shorted shares, at DMND's average pace of trading. In other words, this ample amount of sideline cash could trigger a short-squeeze situation, should Diamond Foods, Inc. (NASDAQ:DMND) continue with its positive price action.
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