Spotify Stock Slips on Potential Changes to Music Licensing

Lawmakers are mulling a change to music licensing rules

by Patrick Martin

Published on Feb 26, 2019 at 9:12 AM
Updated on Jun 24, 2020 at 10:16 AM

The shares of Spotify Technology SA (NYSE:SPOT) are down 2% in electronic trading, after a Wall Street Journal (subscription required) report indicated lawmakers in Washington D.C. were toying with the idea of overhauling music licensing rules. On the charts, Spotify stock has had a rip-roaring start to 2019, adding 31.5% year-to-date, now nearing its newly formed 160-day moving average, with the shares closing Monday at $149.33.

Despite the stock's technical tenacity lately, short sellers keep coming in. Short interest nearly doubled in the last two reporting periods, and the 3.75 million shares sold short marks a record high. However, only a slim 4.6% of SPOT's total available float is sold short.

In the options pits, calls have reigned in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows speculative players have bought to open 6,637 calls in the last 10 sessions, compared to just 1,835 puts.

The good news for options traders is that its a strong time to target the streaming name. Data does suggest it would be a good time to speculate on the security with options, based on the Schaeffer's Volatility Index (SVI) of 33%, which ranks in the 6th annual percentile, hinting at low volatility expectations at the moment.

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