FXCM Inc. (FXCM) Call Volume Soars Amid Rebound

FXCM Inc (FXCM) call buyers are targeting the $2.50 mark today

Jan 21, 2015 at 1:52 PM
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It's been a volatile few sessions for FXCM Inc (NYSE:FXCM) amid the fallout from last week's unexpected currency surprise from the Swiss National Bank. Yesterday, for example, the shares plunged 87%, while today, they are up nearly 43%. Against this backdrop, the equity's 30-day at-the-money implied volatility is lingering in annual-high territory, and options volume has soared to 29 times what's typically seen at this point in the day.

Drilling down, calls are the options of choice, and are outpacing puts by a 13-to-1 ratio. Speculators are targeting a move north of the $2.50 mark over the next several months, with buy-to-open activity detected at FXCM's February, March, and May 2.50 calls. All told, 16,092 contracts have changed hands across this trio of out-of-the-money strikes, representing 70% of the total intraday call volume.

Today's preference for calls over puts is just more of the same in the forex firm's options pits, as evidenced by FXCM's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 8.97. This is echoed in the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.24, which ranks lower than 84% of similar readings taken in the past year.

Outside of the options pits, nearly 15% of the stock's float is sold short, suggesting some of the recent call buying may have been a result of shorts initiating hedges on their bearish bets. Elsewhere, two-thirds of covering analysts still maintain a ""hold" or worse recommendation on FXCM Inc (NYSE:FXCM), while the average 12-month price target of $15.30 stands at an 85% premium to the equity's current perch at $2.29. As KBW has indicated in recent sessions, though, these ratings and price targets are subject to change.


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