UPS Stock Options Traders Bet on a Bigger Bounce

UPS recently bounced off its 160-day moving average

Managing Editor
Nov 24, 2017 at 11:09 AM
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United Parcel Service, Inc. (NYSE:UPS) is making headlines today, after reports surfaced late Wednesday the shipping giant had acquired a manufacturing pharmacy license in the state of Georgia. UPS was trading down 0.2% at $113.52 at last check. Below, we will take a look at the sentiment surrounding United Parcel stock both in and out of the options pits.

Taking a quick look at the charts, UPS stock has had a rocky year. After touching a record high of $121.75 on Oct. 27. More recently, the equity bounced off its rising 160-day moving average earlier this month, but is still stuck in negative year-to-date territory.

In the options pits, speculators have struck a seemingly bullish tone in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows UPS with a 10-day call/put volume ratio of 3.71, ranking in the 83rd percentile of its annual range. This suggests calls have been bought to open over puts at a faster-than-usual clip during the past two weeks.

Drilling down, the January 2018 115-strike call is one of UPS' top open interest positions, with 22,770 contracts currently outstanding. Data from the major options exchanges confirms mostly buy-to-open activity here in recent weeks, meaning traders are betting on UPS toppling $115 -- its 2017 breakeven mark -- by January options expiration.

Sentiment is more mixed outside of the options pits. Short interest fell 11.5% in the most recent reporting period, and now accounts for just 1.5% of the equity's float. Meanwhile, of the 17 analysts covering UPS, 15 maintain a 'hold" or "strong sell" rating.

 

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