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LinkedIn Corp (NYSE:LNKD) just keeps chugging up the charts, tacking on 2.6% today to notch a new record high of $247.74. The stock has advanced more than 115% in 2013, yet the options crowd has upped the bearish ante in recent weeks, picking up puts to either bet on a pullback or "insure" a long stock position.
On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio has gone from 0.67 at the start of the month to 0.89. This ratio now sits just 12 percentage points from a 12-month acme, implying that option buyers are scooping up LNKD puts relative to calls at a faster-than-usual clip.
In the front-month series of options, the out-of-the-money September 205 and 210 strikes have grown increasingly popular, with more than 1,800 contracts added apiece during the past two weeks. The 205 strike is now home to peak put open interest in the series, with more than 2,500 contracts in residence.
As alluded to earlier, it's possible that traders are targeting out-of-the-money puts as portfolio protection. By buying the puts to open, the LNKD shareholders lock in an acceptable sale price -- the strike price -- for their stakes, should the stock take a major turn for the worse in the short term. Their long-term goal remains for LNKD to extend its quest for new highs.
Whatever the motive, LNKD now sports a Schaeffer's put/call open interest ratio (SOIR) of 0.95, which stands higher than 67% of all other readings of the past year. In other words, near-term option traders are more put-heavy than usual right now. What's more, now is an opportune time to pick up short-term options, as the stock's Schaeffer's Volatility Index (SVI) of 31% is just 7 percentage points from a 52-week nadir. Simply put, LNKD's near-term options are inexpensive at the moment, historically speaking.
Outside of the options arena, the bullish bandwagon is far from crowded. Eleven out of 28 analysts maintain tepid "hold" ratings, and the consensus 12-month price target of $244.70 represents a discount to LNKD's current share price.
Should LinkedIn Corp (NYSE:LNKD) continue to assail new heights, an unwinding of pessimism in the options pits, or a wave of bullish brokerage attention, could add contrarian fuel to the stock's fire.