Call Options Popular On Soaring XPO Logistics Stock

ELY is down after a bearish analyst note, and HZNP is getting a lift from the FDA

by Josh Selway

Published on Dec 27, 2017 at 1:31 PM

It's been a sluggish day on Wall Street, with the Dow last seen slightly above breakeven. A few stocks to watch today are Callaway Golf Co (NYSE:ELY), Horizon Pharma PLC (NASDAQ:HZNP), and XPO Logistics Inc (NYSE:XPO). Shares of golf enthusiast ELY are trading lower, while HZNP and XPO are heading the opposite direction.

Analyst Downgrade Sinks ELY Stock

Compass Point this morning downgraded Callaway Golf stock to "sell" from "neutral" just a day after the company upped its Topgolf investment by $20 million. The brokerage firm, which also dropped its price target to $13.50 from $14.50, said it expects Topgolf to be a huge disappointment to ELY shareholders. The shares have shed 6.4% today to trade at $14.11, but remain in a tight channel of higher lows and highs that's essentially been in place since mid-June. Overall, the equity is up roughly 30% in 2017.

There are plenty of Callaway Golf skeptics out there, though. Most notably, short interest accounts for 7.2% of the stock's float, which would take more than two weeks to buy back, going by average daily trading volumes.

HZNP Rises After FDA Expands Use of Procysbi

The Food and Drug Administration (FDA) expanded the use of Horizon Pharma's metabolic disorder treatment procysbi to children as young as one-year old, and HZNP is up 1.3% at $15.14 as a result. The stock is flirting with the site of its giant May bear gap, recently taking back the long-term 64-week moving average. If short sellers keep buying back their shares, more upside could be in store, too. During the last two reporting periods, short interest fell by 12.6% -- but 8.5% of HZNP's float is still sold short.

Call Buyers Bet On Move to $100 For XPO Stock

After exploding higher on Friday thanks to reports Home Depot (HD) has considered buying the company, shares of XPO Logistics are up another 3.4% today at $92.07. In fact, the equity earlier touched a record high of $93.63. It's been a tremendous run for XPO shares, which have enjoyed a seemingly unbreakable uptrend since early 2016, adding more than 400% in the process.

Meanwhile, options volume is exploding. More than 6,500 calls have traded so far, compared to a daily average of just 1,257. The most popular contract by a mile is the January 2018 100-strike call, where buy-to-open activity looks likely. In other words, options traders expect XPO stock to be atop $100 over the next few weeks.

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