Option Volume Soars as Outerwall Inc (OUTR) Slumps

Outerwall Inc (OUTR) is down more than 17% on news of a CEO split

by Karee Venema

Published on Jan 20, 2015 at 1:25 PM
Updated on Apr 20, 2015 at 5:32 PM

Outerwall Inc (NASDAQ:OUTR) has joined Kite Pharma Inc (NASDAQ:KITE) as one of the leading laggards on the Nasdaq today, with the shares of OUTR off 17.5% to trade at $64.13. Prompting the bearish gap was news that CEO J. Scott Di Valerio has resigned after just two years on the job, and will be replaced on an interim basis by board member Nora Denzel. Against this backdrop, the stock has been placed on the short-sale restricted list, and options volume is running at three times the average intraday pace.

Prior to today's news, traders were showing a distinct bias toward puts over calls among options set to expire in three months or less. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 4.30 ranks above all other readings taken in the past year. This is just more of the same, though, as put open interest among all of OUTR's options outweighs call open interest by a nearly 3-to-1 margin.

However, call players have been busy in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), OUTR's 10-day call/put volume ratio has surged to 1.98 from 0.14 at the start of the calendar year. What's more, the current ratio ranks in the 94th annual percentile, meaning calls have been bought to open over puts with more rapidity just 6% of the time within the past year.

Heading into today's session, Outerwall Inc (NASDAQ:OUTR) had been racing up the charts since hitting an annual low of $51.17 on Oct. 10, and tagged a record high of $77.94 last Friday. As such, a portion of the recent call buying may have been at the hands of short sellers hedging against any additional upside, considering nearly 47% of the stock's float is sold short.

Daily Chart of OUTR Since October 2014

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