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Option Brief: Traders are exchanging Groupon Inc (NASDAQ:GRPN) options at three times the normal intraday rate this afternoon. Breaking things down further, roughly 41,000 calls are on the tape, compared to 21,000 puts. However, the most active strike is the February 10 put.
So far, more than 9,400 contracts have traded at the near-the-money strike. While open interest is still greater than volume at the put, implied volatility has soared by 51.2 percentage points, indicating new positions were created. Also, the vast majority of the trades took place at the ask price, conveying buyer-driven activity.
Likely fueling the put purchasing is GRPN's fourth-quarter earnings release, which happens tonight after the close. If that's the case, the traders may be betting on a negative post-earnings reaction to drive the shares below the strike price by options expiration tomorrow afternoon. Alternatively, these individuals may be shareholders trying to guard their long stock positions against a short-term earnings-induced drop.
As alluded to yesterday, Groupon Inc (NASDAQ:GRPN) has experienced some extreme price action in the week following its three most recent trips into the confessional -- although they were all to the upside. At last check, the shares were 2.2% higher at $10.24, pushing their year-over-year gains north of 80%.