GrubHub Shorts Could Hold the Key to Higher Highs

Analysts have been skeptical of GrubHub shares, too

Sep 14, 2017 at 1:41 PM
facebook X logo linkedin

Options activity on GrubHub Inc (NYSE:GRUB) has been on the upswing over the past year. Currently, there are 126,283 options open on GRUB stock -- 100,436 calls and 25,847 puts -- in the 93rd annual percentile, and fewer than 22,100 contracts shy of the 12-month peak of 148,356 contracts hit on Aug. 4. As a point of comparison, total open interest fell to a 52-week low of 19,448 contracts on Sept. 19, 2016.

The bulk of this activity has centered at the January 2018 45-strike call, where 46,620 contracts reside -- GRUB's top open interest position. While it's not clear whether these positions were bought or sold, Trade-Alert indicates most of the activity occurred in May and June, when the stock traded as low as $41.35 (June 12) and as high as $47.84 (June 23), and proceeded a late-April earnings bull gap.

More recently, the September 55 call has been GRUB's most active option in the past two weeks, with 1,062 options traded. This strike is home to peak front-month open interest of 2,578 contracts, and data from the major options exchanges confirms buy-to-open activity. In other words, traders expect the equity to settle north of $55 at tomorrow's close, when the options expire.

This increase in options trading has coincided with GrubHub stock's surge up the charts. Year-over-year, the shares have added nearly 33%, and almost 47% year-to-date. In fact, the shares topped out at a record high $57.61 on Sept. 7, and was last seen trading at $55.31 -- well above the $54 floor the security established following its early August bull gap. 

GRUB could be due for even more upside, too, should short sellers and analysts start to capitulate to the equity's positive momentum. Short interest on GrubHub has more than doubled year-to-date to 19.36 million shares. Not only does the stock's ability to rally to record highs amid such intense selling pressure speak volumes to its underlying strength, but it would take more than three weeks to cover these bearish bets, at the average pace of trading.

A number of analysts remain skeptical of GRUB shares, as well, with five of 16 maintaining a "hold" or worse rating at last night's close. Plus, D.A. Davidson this morning initiated coverage with a "neutral" rating and $48 price target -- below the average 12-month price target of $54. This leaves the door open for upgrades and/or price-target hikes, which could draw more buyers to GrubHub's table.

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI