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Bears Take a Fresh Look at Groupon Inc (GRPN)

GRPN put buying increases during the last two weeks

by 3/15/2013 1:00 PM
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As the company deals with a newly ousted CEO and an increasingly unpredictable competitive landscape, the next move in Groupon Inc (NASDAQ:GRPN - 5.42) is anyone's best guess. This ambivalence has been reflected of late in the stock's options pits. Put traders have collectively asserted themselves lately, anticipating a future pullback in the shares.

During the last 10 sessions, nearly 24,000 Groupon puts have been bought to open on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), nearly at parity with the 26,000 calls that have changed hands. As a means of longer-term comparison, 62,500 puts have been purchased in the last 50 days, far below the 179,500 calls trading over the same time period.

In fact, the stock's 10-day put/call volume ratio on the ISE/CBOE/PHLX has risen to 0.92 of late, which is higher than 71% of the past year's worth of readings. As recently as March 1, this ratio stood at 0.43. Put simply, the speculative crowd has newly (and rapidly) grown more cautious on GRPN shares.

On the charts, Groupon Inc has gained more than 11% in 2013, but remains down a troubling 70% on a year-over-year basis. Talking a view from behind rosy glasses, the shares have managed to fight back roughly 110% from their all-time low of $2.60 hit in mid-November. Today, the stock has muscled more than 6% higher after portfolio manager Bill Miller voiced his support of the company on CNBC.

Year-to-date however, the stock has primarily trekked sideways, apart from an earnings-related bear gap last month. Groupon Inc shares are now starting down their 10-month simple moving average, which is docked around the $5.50 mark and has not been challenged to the upside since the trendline's inception last August.


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