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

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners