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
facebook twitter linkedin

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


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!