Short-Term Bulls See End-of-Week Spike for Yelp Inc. (YELP)

Yelp Inc (YELP) stayed above water yesterday, and options bulls took notice


Published on Jan 28, 2015 at 9:58 AM
Updated on Apr 20, 2015 at 5:32 PM

Yelp Inc (NYSE:YELP) managed to escape the broad-market sell-off yesterday, adding 0.4% to land at $55.63, thanks to an upgrade to "outperform" from "market perform" at Raymond James. In the options pits, speculator sentiment appeared to be predominantly bullish, as calls traded at twice the normal rate.

Diving in, the weekly 1/30 57.50-strike call was by far the most popular option, with 7,876 contracts changing hands. For comparison, the February 60 call -- the second most popular -- didn't even see 900 contracts cross. It appears most of the activity at the 57.50 strike was of the buy-to-open variety. These traders expect YELP to eclipse $57.50 by the close this Friday, when the series expires.

Yesterday's call buying was far from an anomaly, as speculators have been buying to open calls at a faster-than-usual clip in the past two weeks. In fact, YELP's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio comes in at 3.02, outranking 90% of all similar readings from the last year.

Options traders aren't the only ones optimistic on YELP. Of the 27 analysts covering the stock, 16 rate it a "strong buy," with two "buys," nine "holds," and not a single "sell." Also, the equity's average 12-month price target of $80.87 stands at a 45% premium to Tuesday's close.

Taking a glance at the charts, Yelp Inc (NYSE:YELP) has fallen nearly 37% since its September high of $86.88, and was last seen 1.1% lower at $55.03. What's more, dating back to early December, the stock has seen resistance at the $56 region.

Daily Chart of YELP Since Since 2014 with $56 Mark

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