Groupon, Inc. (GRPN) Bulls Encouraged By Big Payday Rumors

Groupon Inc (GRPN) could receive $1 billion from its Ticket Monster investment

by Karee Venema

Published on Feb 5, 2015 at 12:01 PM
Updated on Apr 20, 2015 at 5:32 PM

Groupon Inc (NASDAQ:GRPN) has tacked on 1.6% today to linger near $7.42, amid speculation the online coupon concern may be considering selling its majority stake in South Korea's Ticket Monster Inc -- which could result in a roughly $1 billion cash infusion for GRPN. Options traders are taking kindly to the news, with calls outpacing puts by a 13-to-1 margin.

Drilling down, bulls appear to be buying to open the near-the-money weekly 2/6 7.50-strike call, as they roll the dice on more upside through tomorrow's close -- when the weekly series expires. Thanks to today's pop, delta on the call has jumped to 0.40 from 0.28 at last night's close, indicating a greater chance the position will be in the money at expiration.

Widening the sentiment scope reveals options traders have shown a distinct preference for calls over puts in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GRPN's 50-day call/put volume ratio of 10.06 sits just 5 percentage points from an annual bullish peak. With more than 19% of the stock's float sold short, though, a portion of this call buying could be a result of shorts hedging their bearish bets.

On the charts, GRPN has had a fairly uninspiring start to the year, with the shares off around 10.2%. However, this downward trajectory was recently contained by the equity's 200-day moving average -- a trendline that served as a springboard for Groupon Inc (NASDAQ:GRPN) in mid-December.

Daily Chart of GRPN Since October 2014 With 200-Day Moving Average

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