Vipshop Holdings Limited (VIPS) Bulls Gamble On Higher Highs

Vipshop Holdings Ltd - ADR (VIPS) hit an earnings-induced record high earlier

Feb 17, 2015 at 2:56 PM
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Call players have set their sights on Vipshop Holdings Ltd - ADR (NYSE:VIPS), as the equity surges following some well-received fundamental news. At last check, the stock was up 14.5% at $24.95 -- just off its record peak of $25.07 tagged earlier -- and calls were crossing the tape at a rate five times the intraday average.

One strike of notable interest is VIPS' February 24.50 call, where all signs suggest buy-to-open activity. By initiating these long calls, speculators are rolling the dice on the equity to extend its lead north of the strike through Friday's close, when front-month options expire. Delta on the call is perched at 0.66, suggesting a roughly 2-in-3 chance of an in-the-money finish.

Today's accelerated call activity is just more of the same for a stock that's more than doubled in value on a year-over-year basis, and tacked on 28% in 2015 alone. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 2.60 ranks just 2 percentage points from a 52-week peak.

Along similar lines, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.53 not only indicates that call open interest nearly doubles put open interest among options set to expire in three months or less, but it rests lower than all other readings taken in the past year. Simply stated, short-term speculators are more call-heavy now toward Vipshop Holdings Ltd (NYSE:VIPS) than at any other time during the last 12 months.


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