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Bearish Options Players Find Skullcandy Puts to be Sweet Treats

SKUL sees a considerable surge in put volume

by 12/13/2011 1:41 PM
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Skullcandy (SKUL - 12.41) has seen an unusual amount of put activity today, as nearly 1,400 of these bearish options have crossed the tape so far, reflecting an impressive 21 times the equity's expected intraday volume. At least 1,060 of these puts were exchanged at the January 2012 12.50 strike -- almost all of them at the ask price, pointing to buyer-fueled volume. This option currently carries open interest of just 352 contracts, making it safe to assume that new positions are being initiated here today.

However, today's preference for puts marks a change of pace in the options arena. According to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SKUL's 10-day call/put volume ratio stands at 21. This confirms that calls bought to open have outnumbered puts by 21 to one during the past two weeks.

Meanwhile, short interest on SKUL jumped by 17.8% over the past two reporting periods, which could imply that some of the recent call volume might be the result of hedging activity by short sellers. Either way, these bearish bets make up a whopping 40.54% of the company's float. It would take more than 26 days to cover these shorted shares, at the stock's average daily trading volume.

Examining SKUL's technical performance, the audio products guru has lost roughly 16.5% of its value so far in December, and has underperformed the broader S&P 500 Index (SPX) by almost 26% during the past 20 sessions. Also, the stock has been struggling against resistance at its 10-day moving average since November. In fact, SKUL managed to tag an all-time low of $11.79 earlier in the session.

At last check, the stock is down about 0.4% to hover around the $12.41 level.


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