Options Bulls Target Etsy Stock After Upgrade

Call volume is today running at triple the intraday average

Digital Content Manager
Apr 4, 2023 at 10:38 AM
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Piper Sandler upgraded Etsy Inc (NASDAQ:ETSY) stock to "overweight" from "neutral" earlier, and raised its price target to $140 from $135, implying a more than 29% upside to its last close. The brokerage noted the online marketplace's active buyer growth could accelerate in the medium term, and praised its momentum with the Gen Z audience.

Options bulls are taking notice. So far today, 4,380 calls have been exchanged -- triple the intraday average -- as opposed to 2,537 puts. Most popular is the weekly 4/14 118-strike call,  followed by the 108-strike put in that same series, with new positions being opened at both.

That preference for calls has been the norm lately, per the security's 50-day call/put volume ratio at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all other readings from the past year. 

The equity is also seeing attractively priced premiums at the moment, per its Schaeffer's Volatility Index (SVI) of 46%, which stands in the low 2nd percentile of its annual range.

Meanwhile, short sellers have been piling on, with short interest up 14.3% in the two most recent periods. The 15.28 million shares sold short now make up 12.4% ETSY's available float. Shares could surge even higher should some of this pessimism start to unwind.

Etsy stock is still struggling with a ceiling at the $116 level, which has been in place for the past several weeks and contained its late March rally. Shares are today eyeing their third-straight close above the 20-day moving average, though, and have added 28.1% over the last nine months.


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