TTD has been struggling, but hitching a ride to OpenAI may be the way out
Trade Desk Inc (NASDAQ:TTD) stock is single-handedly keeping the software sector afloat today, last seen up 21.6% to trade at $30.60. The Information reported that the company is in early-stage talks with OpenAI about selling ads on ChatGPT.
The shares are poised for their best single-session gain since February 2023. Prior to today's breakout, TTD had carved a channel of lower lows, culminating in a Feb. 26 12-month bottom of $21.08. Now, the stock is poised to clear its 50-day moving average on a closing basis for the first time since October.
If this spark has holding power, an unwinding of pessimism can fuel the rally. Of the 39 brokerages covering TTD, 21 maintain "hold" or worse ratings. Short interest, meanwhile, is up 10.7% in the two most recent reporting periods, and a the 46.45 million shares sold short accounts for 10.7% of the stock's total available float.
Call traders are out in droves this morning. In just the first hour of trading, 148,000 calls have changed hands, volume that's 15 times the average intraday amount and almost triple the number of puts traded. New positions are being bought to open at the April 35 call, while the September 35 call is also popular.
The good news for options traders is premium is affordably priced at the moment. TTD's Schaeffer's Volatility Index (SVI) ranks in the 20th percentile of its annual range, meaning options traders are pricing in low volatility expectations. The stock has tended to exceed those expectations over the past year, too, per its Schaeffer's Volatility Scorecard (SVS) of 99 out of 100.