Bitcoin Buzz Weighs on RIOT Stock, and a Top Pick From Chanos

MD shares have already had a horrible year

by Josh Selway

Published on Jul 18, 2018 at 2:42 PM
Updated on Jul 19, 2018 at 9:02 AM

The Dow is holding higher this afternoon, putting the index on pace for a fifth straight win. Three names making notable moves are Clorox Co (NYSE:CLX), biotech-turned-blockchainer Riot Blockchain Inc (NASDAQ:RIOT), and medical group MEDNAX, Inc. (NYSE:MD). We'll take a closer look at how shares of CLX, RIOT, and MD are trading on the charts.

CLX Options Traders Ready For Pullback

CLX shares have fallen 3.9% to $129.79 -- putting them near the bottom of the S&P 500 Index (SPX) today -- after a downgrade to "sell" from "neutral" out of Goldman Sachs. Analysts cited the company's slow sales and an unreasonable valuation. This dip puts an end to a recent hot streak for the security, as it's rallied hard off its late-April lows near $114.

In the options pits, traders seem prepared for such a pullback. Clorox sports a Schaeffer's put/call open interest ratio (SOIR) of 3.24, showing put open interest more than triples call open interest among contracts that expire within three months. What's more, this reading ranks just 4 percentage points from an annual high, showing that such a put-skew is highly unusual.

Bitcoin Headlines Sink RIOT Stock

Bitcoin is back in the headlines, and that means RIOT stock is making big moves. The shares have shed 7% to trade at $5.85, after a round of bad news for cryptocurrencies. Fed Chair Jerome Powell spoke lowly on bitcoin and its peers, and hedge fund manager Ken Griffin sternly advised against the idea of owning bitcoin.

The side-taking has been evident on Riot Blockchain itself. Specifically, it would take almost two full weeks to buy back the 3.1 million shares held by short sellers, going by average daily volumes. RIOT stock has collapsed under this short pressure, suffering a nasty downtrend from its 2018 entry point near $28 to current levels -- though it notched a significant 37.6% win in yesterday's session.

Chanos Names MD Short as Top Pick

While his Dunkin Brands (DNKN) short call has yet to move in his favor, Jim Chanos is still in action today, saying his short position on MEDNAX stock is one of his best ideas at the moment*. MD shares have shed 1.7% as a result to trade at $43.26, and that's with the stock coming into today already with a more than 18% deficit on a year-to-date basis.

Analysts are certainly taking the skeptical side of things, with just three of the 14 in coverage recommending MD as a "buy." Still, the average 12-month price target stands all the way up at $51.77, revealing room for potential price-target reductions going forward.

*Editor's note: A previous version of this article inaccurately said private investment company KKR was planning to buy MEDNAX. KKR is planning to buy Envision Healthcare (EVHC), another Chanos short position, not MD.

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