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Following yesterday morning's jump to an all-time peak of $54.08 -- courtesy of a "buy" initiation from Citigroup -- 3D Systems Corporation (NYSE:DDD) saw its overall options activity spike to more than three times the daily norm. Most of this activity took place on the call side, as roughly 44,000 contracts -- nearly four times the equity's average single-day call volume -- changed hands throughout the course of the session.
Attracting the most attention was the weekly 8/30 52-strike call, where 5,607 contracts crossed for a volume-weighted average price (VWAP) of $1.06. The majority of these contracts went off at the ask price, while open interest added 2,987 positions overnight, making it safe to assume long calls were initiated at this strike.
By purchasing these out-of-the-money options, yesterday's call buyers anticipate DDD will finish north of the breakeven price of $53.06 (strike price plus the VWAP) by this Friday's close, when the options expire. Amid the broad-market pullback, DDD was last seen trading at $49.60, or 7% below the aforementioned breakeven rail. As such, delta at this strike has dropped to 0.20 from 0.50 at yesterday's close. This means the options now have a 1-in-5 chance of finishing in the money upon expiration. Should DDD continue to linger below the 52 strike by week's end, the most yesterday's call buyers risk losing is the initial premium paid.
On the charts, DDD has had an impressive run as of late, tacking on 80.4% year-over-year, and 36.2% in the past six months. Still, short interest
accounts for a brow-raising 27.6% of the stock's available float, which would take nearly seven sessions to cover, at the stock's average pace of trading. (It is therefore possible that some of the recent call-buying activity in DDD is due to short sellers hedging their bearish bets.) Also, DDD may end up benefiting from future short-covering activity, which could give the stock a boost into higher territory.