Stone Energy Corporation (SGY) Has Been Burning Bears in June

Stone Energy Corporation (SGY) has rocketed more than 70% in June, much to the dismay of option bears, short sellers, and analysts

Jun 22, 2016 at 1:47 PM
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To the dismay of bearish options traders, Stone Energy Corporation (NYSE:SGY) is booming again this afternoon -- despite the absence of an obvious catalyst. At last check, the oil-and-gas stock has rallied 12.5% to sit at $9.20 amid heavy stock trading. In fact, intraday volume is on pace for the 98th percentile of its annual range.

So far in June, SGY has skyrocketed more than 70%, and is on pace to end another session atop its 60-day moving average -- a form of support in late 2015. From a longer-term perspective, though, SGY's chart is far from pretty -- not surprising for a firm recently at risk of default. On a year-over-year basis, the stock has surrendered over 93% of its value.

SGY Chart June 22

If SGY options traders have their druthers, SGY will resume its longer-term downtrend. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), puts and calls have been bought to open at nearly identical rates. However, the resultant put/call volume ratio of 1.02 ranks just 10 percentage points from an annual peak. In other words, put buyers have been more active than usual in recent months.

On top of that, SGY's Schaeffer's put/call open interest ratio (SOIR) is 1.34, indicating put open interest outstrips call open interest among options with a shelf-life of three months or less. This ratio ranks in the top quartile of its 52-week range, too, reinforcing the aforementioned put-skew.

Separately, short stock positions have accumulated on Stone Energy Corporation (NYSE:SGY). While in recent weeks these bearish bets have been unwinding -- dropping 18.6% during the most recent reporting period -- a still-lofty 31.6% of the stock's float is sold short. Likewise, all seven analysts following SGY maintain "hold" or "sell" ratings, with not a "buy" to be seen. Should SGY continue to claw its way higher, plenty of bears could be kicking rocks.

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