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Linkedin Corporation (LNKD) Option Traders See Higher Highs

LNKD traders are picking up near-term call options

by 2/11/2013 1:39 PM
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The shares of Linkedin Corporation (NYSE:LNKD - 156.60) are on fire today, continuing last week's earnings-induced rally. What's more, options traders are betting on the professional networking concern to extend its quest for record highs this week, as evidenced by today's affinity for short-term calls.

In afternoon action, LNKD has seen around 56,000 calls change hands -- about five times its average intraday volume. Most popular have been the February 155 and 160 calls, which have seen roughly 9,800 and 10,400 contracts exchanged. The majority of the calls have traded at the ask price, and volume has outstripped open interest at both strikes, pointing to newly bought bullish bets.

The 155-strike calls have crossed at a volume-weighted average price (VWAP) of $3.03, meaning the buyers' reward will increase the further LNKD muscles north of $158.03 (strike plus premium paid) through the end of the week, when February-dated options expire. The 160-strike calls, meanwhile, have traded at a VWAP of $1.59, suggesting the buyers will reap a reward if LNKD topples the $161.59 level -- in all-time-high territory. On the flip side, the buyers' maximum risk is the initial premium paid for the calls.

Despite LNKD's impressive performance both on and off the charts, though, today's appetite for short-term calls runs counter to the trend. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.07 indicates that puts outnumber calls among options expiring within three months. Even more telling, perhaps, this ratio ranks in the 72nd percentile of its annual range, implying that short-term options traders are more put-biased than usual at the moment.

At last look, LNKD is up 4% to explore the $156.60 vicinity. Earlier in the session, the shares tagged a new record high of $158.90. Should the stock extend its upward momentum, an unwinding of pessimism in the options pits could add contrarian fuel to LNKD's fire.


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