Traders Celebrate 'Square For Restaurants' Launch

A short squeeze could push SQ even higher

Managing Editor
May 8, 2018 at 2:53 PM
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Stocks are lower today, but paring their losses, as Wall Street reacts to President Trump's decision to withdraw from the Iran nuclear agreement. Meanwhile, camera manufacturer GoPro Inc (NASDAQ:GPRO), China-based Baidu Inc (NASDAQ:BIDU), and payments processor Square Inc (NYSE:SQ) are all moving higher today. Here's a closer look at what has shares of GPRO, BIDU, and SQ moving today.

GoPro Stock Trying to Break Through Resistance

GoPro stock is up an 6.8% to trade at $5.80, gaining momentum after the company's first-quarter earnings beat last week. The shares are on track to finish above their descending 100-day moving average for the first time since early November. GPRO has still given back nearly 23% in 2018, culminating in a record low of $4.42 on April 4. 

Analysts remain skeptical, however. All 10 of the brokerages covering the security rate it a "hold" or worse. Furthermore, GPRO's 12-month price target of $5.63 now sits below the stock's current perch. 

In the options pits, puts continue to be overwhelmingly popular. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows GPRO with a 10-day put/call volume ratio of 2.76, which ranks in the 100th annual percentile. This suggests puts have been purchased over calls at a much faster-than-usual clip over the past two weeks.

Baidu Stock Gets iQiyi Bump

Baidu stock is up 3.5% to trade at $262.80, after China's iQiyi, Inc. (NASDAQ:IQ) -- a Netflix-esque video platform -- received a "buy" rating from Goldman Sachs. Baidu owns a majority stake in iQiyi, which went public on March 29 with an initial public offering (IPO) price of $18. BIDU stock has gained nearly 12% in 2018, and has surged more than 50% from its June low. The shares are now eyeing the $265 area, which has acted as a speed bump in 2018.

Options traders have been more bearish than normal recently. BIDU's Schaeffer's put/call open interest ratio (SOIR) of 1.10 ranks in the 76th percentile of its annual range, suggesting near-term traders are more put-biased than normal.

It's also worth noting that BIDU sports a Schaeffer's Volatility Scorecard (SVS) of 93 out of 100. This lofty ranking means the equity has tended to register bigger price swings than its options premiums have priced in over the past 12 months.

Square Stock Bounces Off Bullish Trendline Yet Again

Square stock is up 4.7% to trade at $53.51, after the software company launched Square for Restaurants, a point-of-sale program designed to run all the functions of a restaurant. Square shares have more than doubled in the past year, with pullbacks contained by their ascending 80-day moving average. 

A short squeeze could provide more tailwinds for the equity. Short interest fell by 7% in the two most recent reporting periods, yet the 35.92 million shares sold short represents a healthy 13% of SQ's total available float. At the security's average daily pace of trading, it would take nearly four days to repurchase those bearish bets.

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