SouFun Holdings Ltd (SFUN) Bulls Eye Double Digits

Today's call buyers expect SouFun Holdings Ltd to muscle atop $10

by

Published on Nov 17, 2014 at 1:55 PM
Updated on Apr 20, 2015 at 5:09 PM

SouFun Holdings Ltd (NYSE:SFUN) has slipped 1.7% this afternoon to hover near $8.80, bringing its year-to-date loss close to 47%. However, that isn't stopping options traders from wagering on an advance back into double-digit territory.

Getting into the details, calls are crossing the tape at quadruple the expected intraday clip. What's more, SFUN's 30-day at-the-money implied volatility has edged 2.7% higher to 59%, indicating strong demand for short-term strikes. Nevertheless, the most active option by far is the longer-term February 10 call, where 6,064 contracts have been exchanged.

More than four-fifths of the activity here has transpired at the ask price, and volume outstrips open interest, collectively hinting at newly bought bullish bets. This theory is corroborated by data from Trade-Alert. In other words, these buyers anticipate SFUN will topple $10 by the close on Friday, Feb. 20 -- something it hasn't done since Oct. 24 -- which is when the options expire.

There is another possibility, however. Considering 9.4% of SouFun Holdings Ltd's (NYSE:SFUN) float is sold short, some of today's call buyers may actually be short sellers picking up protection against any unexpected upside.


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