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Option Bears Belly Up to OpenTable

Buy-to-open put volume on OPEN is fast approaching annual-high levels

by 8/30/2012 9:09 AM
Stocks quoted in this article:

Bearish bettors eyed restaurant reservation site OpenTable, Inc. (NASDAQ:OPEN - 43.40) on Wednesday, as put volume on the stock surged to nearly two times the daily norm. While 3,629 put options crossed the tape on OPEN, only 107 calls were exchanged -- representing just 6% of the equity's average daily call activity.

Data from the major options exchanges confirms a pessimistic slant to the day's option volume. During the course of the session, OPEN speculators bought to open 2,590 puts on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). By contrast, only 2 calls were purchased across these three exchanges -- netting OPEN a seriously lopsided single-day put/call volume ratio of 1,295.

From a broader perspective, though, the session's skew toward puts over calls simply continued a recent trend. Over the past 10 sessions, OPEN has racked up a put/call volume ratio of 5.35 on the ISE, CBOE, and PHLX. This ratio ranks above 99% of other such readings taken during the past year, as traders have rarely shown a greater preference for bearish bets over bullish.

In the front-month series, peak put open interest of 6,079 contracts can be found at the September 40 strike. The majority of these contracts were bought to open, suggesting that quite a few speculators are looking for OPEN to tumble below this round-number level over the next four weeks.

After checking out the charts, it's not hard to see why traders are so gloomy toward OPEN. The shares are down roughly 29% over the past 52 weeks, and the $45 level has emerged as a stubborn layer of resistance. Following the stock's most recent rally up to this familiar technical roadblock, speculative players appear to be looking for an imminent pullback.

 Weekly Chart of OPEN since June 2011


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