Option Volume Explodes on Sinking AAC Holdings Inc (AAC)

AAC Holdings Inc (NYSE:AAC) tumbled to a record low earlier, after a short seller weighed in on the company's recent fundamental woes

Aug 4, 2015 at 3:00 PM
facebook X logo linkedin


It's been a pretty shocking week for AAC Holdings Inc (NYSE:AAC), after California courts unsealed documents charging the company's co-founder and former president, Jerrod Menz -- as well as several other employees -- with murder in the 2010 death of a client. Additionally, short seller Bleecker Street Research today published a critical report of the firm. Against this backdrop, the stock has plunged 37% --  fresh off a record low of $15.09 -- and is securely on the short-sale restricted list, after being halted several times.

In the options pits, overall volume has surged to 20 times the average intraday pace, and amid the uncertainty surrounding future price action, AAC's 30-day at-the-money implied volatility has more than doubled to 115.9% -- an annual high. The security's August 22.50 call has seen the most action, where speculators appear to be buying and selling to open the options.

For those purchasing the calls, the goal is for AAC to rally back above the strike by the close on Friday, Aug. 21 -- when front-month options expire. Meanwhile, those initiating short calls are hoping $22.50 -- which roughly coincides with the stock's October 2014 highs -- serves as a short-term ceiling.

Widening the sentiment scope reveals short-term traders have shown a penchant for near-the-money puts over calls among options expiring in three months or less. Specifically, the security's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) is docked at a top-heavy 2.24.

Elsewhere on the Street, short sellers are likely cheering today's sell-off, with roughly 36% of the stock's float is sold short. However, additional troubles could be on the horizon, considering AAC Holdings Inc's (NYSE:AAC) consensus 12-month price target of $52.50 stands at a 163% premium to current trading levels. Going forward, a round of price-target cuts could pressure the shares of AAC.


 

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 C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI