New Highs for Spotify After DC Comics, Kardashian Deals

SPOT calls are flying off the shelves today

Digital Content Manager
Jun 18, 2020 at 11:12 AM
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The shares of Spotify Technology SA (NYSE: SPOT) are up 9.5% at $218.87 this morning, after the Swedish streaming company inked a deal with reality TV star Kim Kardashian West to host a criminal justice podcast. The exclusive show will be connected to West's work with The Innocence Project, a nonprofit that fights wrongful convictions. But Spotify wasn't done; the company also signed a deal with Warner Brothers for a podcast series involving DC Comic Books characters. The multi-year agreement will see Warner Bros. produce scripted podcasts featuring popular characters such as Batman and the Justice League. Spotify has now secured three unique podcast deals in the last month.

Right out of the gate, Spotify stock nabbed a new record high of $220.59. SPOT has staged an impressive comeback from its mid-March lows near the $109 level, nearly doubling in that timeframe. Although the shares took a breather earlier this month, the pullback was contained by their 20-day moving average. 

Analysts are split toward SPOT, with half of the 16 in coverage sporting a "buy" or better, and eight carrying a tepid "hold" or worse. Meanwhile, the 12-month consensus target price of $170 is a whopping 21.49% discount to current levels. This indicates the security is ripe for price-target hikes, which could provide additional tailwinds.

That sentiment is not echoed in the options pits, where the appetite for calls is high. In the last 10 days, 7.44 calls were bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio sits higher than all other readings from the past year, meaning calls are being picked up at a faster-than-usual clip.

Today is more of the same. SPOT options have exploded today, with 65,000 calls changing hands at last check. That's 13 times the average intraday amount, and almost six times the number of puts traded. Most popular is the June 220 call, followed closely by the 230-strike call in the same series, with new positions being opened at both. Buyers of these calls are eyeing a renewed push from SPOT into tomorrow's close, when the contracts expire.

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