Wayfair Stock Takes Off as Analyst Praises Attractive Entry Point

Puts have been preferred by Wayfair option traders

Managing Editor
Aug 22, 2019 at 9:34 AM
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Online furniture retailer Wayfair Inc (NYSE:W) is surging right out of the gate this morning, already up 3.3% at $118.88, after receiving a fresh bull note from Stifel. The brokerage firm upgraded to a "buy" from "hold," with a $150 price target, saying the stock's recent 12% drop made an attractive entry point for buyers. 

Interestingly, the stock's Schaeffer's Volatility Index (SVI) of 45% ranks in the bottom 10th percentile of its annual range. In other words, short-term W options are attractive right now, as they are pricing in relatively low volatility expectations.

Looking closer at options, data from the  International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) show W with a 10-day put/call volume ratio of 2.74, which ranks in the 94th annual percentile. This indicates puts have been purchased over calls at a faster-than-usual clip, leaving the door wide open for call buyers to enter the ring.

There also looks to be plenty of room for more bull notes on Wayfair stock. Coming into today, 14 of 23 analysts carry a tepid "hold" or "strong sell" rating. Also of interest, more than 20% of the stock's total available float is sold short, meaning it would take short sellers nearly nine days to buy back their bearish bets.

While shares of Wayfair stock have struggled in recent weeks, the equity remains 27.7% higher year-to-date, and more than 45% above its Christmas Eve bottom of $78.86. W is also eyeing its sixth straight close higher.

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