Vector Group Stock Crushes Shorts During Surge

VGR stock is poised for its sixth straight gain

Sep 13, 2019 at 11:27 AM
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The shares of Vector Group Ltd (NYSE:VGR) bottomed at nearly 10-year low of $8.62 in late May, but have since been making a beeline higher, up 59% to trade at $13.69. The sharp surge -- sparked in part by reaction to VGR being added to the S&P SmallCap 600 Index (SP600) -- has the tobacco stock trading above the 200-day and 320-day moving averages, and short sellers underwater.

Specifically, short interest surged 68.5% in the June 1 through Sept. 1 reporting periods to 19.65 million shares -- a time frame in which Vector Group shares gained roughly 27%. Not only does the stock's ability to rally in the face of such intense selling pressure point to underlying strength, but it would take shorts more than two weeks to buy back their bearish bets, at the equity's average pace of trading. A round of short covering could keep the wind at VGR's back.

Positive analyst attention could draw buyers to Vector Group's table, too. Just one analyst is currently covering VGR stock, and they maintain a tepid "hold." Should the equity extend its run higher -- the shares are up 1.3% today, pacing for a sixth straight win -- bullish initiations or upgrades could create tailwinds.

Optimism has certainly been growing in the options pits in recent weeks. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), VGR's 10-day call/put volume ratio of 2.60 registers in the 83rd annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip. The December 12.50 call has seen the biggest increase in open interest over this two-week period, with buyers betting on bigger gains by Christmas.

vgr stock daily price chart on sept 13

 

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