Options Pick Up on Pinterest Amid Facebook Buzz

Support at the 20-day moving average caught this morning's pullback

by Lillian Currens

Published on Feb 14, 2020 at 1:44 PM
Updated on Jun 24, 2020 at 10:16 AM

Social media heavyweight Pinterest Inc (NYSE:PINS) is in focus because of a new product from Facebook (FB) called Hobbi. The app, which was released yesterday, will act as a direct competitor to Pinterest's scrapbook-style format, describing itself as a way to "organize your photos into visual collection and see the progress you're making over time." At last check Pinterest is down 1.6% to trade at $23.18, and some options traders are responding.

Calls are crossing at an accelerated clip today, led by the February 24 call, though some traders may be closing positions here. On the other hand, new positions are opening at the May 22 and 23 calls.

Looking back at the last 10 days, 96,558 long calls have crossed the tape at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to 16,558 puts. This has PINS sporting a Schaeffer's put/call open interest ratio (SOIR) of 0.41, indicating that calls expiring in the next three months outweigh puts by more than 2-to-1. 

That being said, options look like an attractive way to speculate on PINS next move. The security's Schaeffer's Volatility Index (SVI) of 43% sits higher than just 8% of readings from the past year. This means short-term options have priced in lower volatility expectations just 8% of the time in the last 12 months.

Steady support at its 20-day moving average may be helping to keep the stock afloat, since it's caught several pullbacks during PINS' attempt to rally off its mid-December bottom. For the year, the stock is already up 26.8%, with even more support emerging at the $23 region, which previously served as a ceiling for the equity. 

Sentiment on the tech name appears to be divided. Ten analysts in coverage consider PINS a "buy" or better, while nine say "hold." Meanwhile, the consensus 12-month price target of $30 is a 26.9% premium to current levels. 


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