Option Traders Find Opportunity on Battered LinkedIn Corp (LNKD)

Oversold LinkedIn Corp (NYSE:LNKD) is bouncing from three-year lows to trade north of the century mark

Feb 11, 2016 at 3:50 PM
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Social networking stocks are at the forefront of traders' attention today, with Twitter Inc (NYSE:TWTR) floundering amid concerns of stalled growth, Zynga Inc (NASDAQ:ZNGA) hitting record lows, and Facebook Inc (NASDAQ:FB) bucking the trend lower. But below we'll check in with professional networking stock LinkedIn Corp (NYSE:LNKD), which is just coming off its worst single day of trading in the company's history.

Last Friday, LNKD gapped nearly 44% lower after its 2016 guidance spooked investors. 
In the days since, LNKD touched a three-year low of $98.25 on Wednesday, and is trying to establish a round-number floor atop the century mark. The stock has managed to add 1% to trade at $102.75 today, and sports a 14-day Relative Strength Index (RSI) of 17 -- in oversold territory. 

Option players are likely hoping for a rebound in the battered shares. Specifically, LNKD's 50-day call/put volume ratio of 1.44 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is higher than 90% of all readings from the past year.

And near-term traders have been call-heavy in the extreme -- the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.63 is at an annual low. Call open interest on LNKD is also now at a yearly peak.

There could be incentive for option traders to get in on the action now, too; LinkedIn Corp's (NYSE:LNKD) Schaeffer's Volatility Scorecard (SVS) is at 95, meaning the stock has been making outsized moves compared to what the options market has priced in over the past year.

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