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Groupon Inc (GRPN) Option Traders Bet On a Short-Term Advance

Groupon Inc's April 8 call is garnering attention today

by 3/14/2014 3:01 PM
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Calls have been preferred over puts in Groupon Inc's (NASDAQ:GRPN) options pits during the past 10 weeks, per data from the major exchanges. Specifically, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day call/put volume ratio of 3.09 ranks in the 72nd percentile of its annual range, meaning calls have been bought to open over puts at a faster-than-usual pace.

It's a trend witnessed in today's session, where calls are outpacing puts by a more than 2-to-1 margin. The most active strike heading into the final hour or so of trading is GRPN's April 8 call, where 2,150 contracts have traded. The majority of these calls have crossed on the ask side, and implied volatility has ticked higher, pointing to the initiation of new positions. What's more, data from the ISE confirms that at least a portion of the day's activity is of the buy-to-open variety.

With GRPN lingering near $8.35, these calls are currently in the money. However -- all other factors being equal -- breakeven for the call buyers is $8.75, or the strike plus the volume-weighted average price of $0.75.

On the charts, Groupon Inc (NASDAQ:GRPN) is sporting a year-over-year advance of about 66%. More recently, though, the stock took a big dive in late February following its dismal first-quarter forecast. In the subsequent sessions, the security has spent its time churning between $8 and $9.


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