Conn's, Inc. (CONN) Surge Has Options Bulls Piling On

CONN'S, Inc. (CONN) is higher today on an upgrade at Stifel

Feb 9, 2015 at 10:45 AM
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CONN'S, Inc. (NASDAQ:CONN) is bucking the broad-market trend lower today -- up 13.7% at $25.56 -- after Stifel boosted its outlook on the shares to "buy" from "hold." Options traders are responding in kind, and are scooping up calls at a rate nearly four times the intraday average. Short-term contracts are in high demand, too, as evidenced by CONN's 30-day at-the-money implied volatility, which is 15.3% higher at 78.7%.

Drilling down, buy-to-open activity has been detected at the stock's March 24 and 26 calls, as traders eye a continued rally over the next six weeks. Amid today's surge, delta on the lower-strike call has jumped to 0.66 from 0.41 at last Friday's close, while delta on the higher-strike call is up to 0.51 from 0.30, signifying a greater probability the calls will be in the money at expiration.

Today's accelerated call activity marks a change of pace in the equity's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 1.08 ranks in the bearishly skewed 88th annual percentile. Plus, CONN's Schaeffer's put/call open interest ratio (SOIR) of 1.28 sits higher than 94% of similar readings taken in the past 52 weeks, meaning short-term speculators have rarely been as put-skewed as they are now.

On the charts, CONN'S, Inc. (NASDAQ:CONN) has rallied 62% this month, due in large part to last week's well-received same-store sales report. However, the equity remains a long-term laggard, and on a year-over-year basis, is down 56%.

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