Short-Term Traders Eye More Upside for Groupon Inc (GRPN)

Groupon Inc has been surging since bouncing from its 200-day moving average

Digital Content Group
Dec 29, 2014 at 10:15 AM
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Groupon Inc (NASDAQ:GRPN) has been on a technical tear since bouncing off its 200-day moving average earlier this month. In fact, since hitting a month-to-date low of $6.82 on Dec. 16, the shares have tacked on nearly 22% to trade at $8.31. Option traders have responded, as the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.47 ranks in its 68th annual percentile.

This preference for bullish bets over bearish was witnessed on Friday, amid GRPN's 3.2% rally. Specifically, calls crossed at nearly three times the expected daily rate, and six times the pace of puts. Those traders are eyeing modest short-term upside for the shares, buying to open the weekly 1/2 and January 2015 8.50-strike calls. In other words, these speculators anticipate GRPN will topple $8.50 by the close on the respective expiration dates.

Not everyone has boarded Groupon Inc's (NASDAQ:GRPN) bullish bandwagon, however. Almost 21% of the equity's float is sold short, which would take more than six sessions to cover, at typical daily trading volumes. From a contrarian perspective, if the shares can sustain their upward momentum, a short-covering rally could ensue.

Daily Chart of GRPN since June 2014 with 200-Day Moving Average


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