Options Traders Blast Peloton Stock on Buyout Rumors

Year-over-year, PTON has shed more than 78%

Digital Content Manager
Feb 7, 2022 at 10:40 AM
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Peloton Interactive Inc (NASDAQ:PTON) is surging today, last seen up 21.1% to trade at $29.80, following reports that Amazon.com (AMZN) and Nike (NKE) are considering buying the fitness equipment maker. However, Cowen and Company told clients a deal is unlikely due to PTON's dual-class share structure, and the equity earlier received a price-target cut from Canaccord Genuity to $56 from $85.
Analysts are optimistic towards Peloton stock, however, with 12 of the 21 in coverage calling it a "buy" or better, while nine carried a tepid "hold" or worse rating. Plus, the 12-month consensus target price of $46.96 is a healthy 53.4% premium to its current perch. Meanwhile, short sellers are piling on. Short interest rose 34.2% in the last two reporting periods, and the 34.40 million shares sold short make up 11.8% of the stock's available float.

The options pits lean firmly bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PTON sports a 10-day put/call volume ratio of 2.03 that sits higher than 97% of readings from the past year. This means puts have been getting picked up at a much quicker-than-usual clip. 

The buyout rumors are causing a ruckus in the options pits. So far today, 71,000 calls and 54,000 puts have crossed the tape, or five times the volume that is normally seen at this point. Most popular is 2/11 30-strike put, followed by the 22-strike put in the same series, with positions being opened at both.

Peloton stock has been tumbling down the charts, culminating in a Jan. 28, two-year low of $22.81. While today's pop has shares bouncing off a recent floor around the $25 area, long-time pressure at the 40-day moving average is keeping gains in check. Year-over-year, PTON is down 78.9%.

It's also worth noting the equity's Schaeffer's Volatility Scorecard (SVS) sits at 84 out of 100. This suggests the stock has exceeded options traders' volatility expectations during the past year.


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