Square Shares Stumble After Downgrade

Puts are popular in the options pits

by Laura McCandless

Published on Apr 16, 2020 at 10:32 AM

Shares of e-commerce name Square Inc (NYSE:SQ) are down 4.6% to trade at $58.54 after receiving a downgrade to "underperform" from "market perform" by Raymond James. Though SQ has been performing above what usually calls for a downgrade from the brokerage, they cited significant risks due to coronavirus that could take the company a long time to recover from. SQ-owned Cash App, for example, is not "profitable/big enough to offset seller business headwinds."

SQ has been rising on the charts since hitting a two-year low of $32.33 on March 23. However, the equity is now running into resistance from the 40-day moving average, and remains down 7.6% year-to-date. 

Coming into today, analysts are split, with 14 sporting a "strong buy," one a "buy," and the remaining 16 a lukewarm "hold." Meanwhile, the stock's 12-month consensus price target is a 10% premium to current levels. 

In the options pits, puts have been popular. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 1.31 puts have been bought for every call in the past 10 days. This ratio sits in the 100th percentile of its annual range, suggesting the appetite for puts is higher than usual. 


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