Options Heat Up as Veeva Systems Inc. (VEEV) Goes Bust

Veeva Systems Inc (VEEV) is slumping after a post-earnings downgrade


Published on Mar 4, 2015 at 12:22 PM
Updated on Apr 20, 2015 at 5:09 PM

Cloud software firm Veeva Systems Inc (NYSE:VEEV) is in bust mode today, dropping nearly 22% to trade at $25.50 and landing on the short-sale restricted list, following a poorly received earnings report. Exacerbating the selling pressure is a downgrade to "hold" from "buy" at Deutsche Bank, which also slashed its price target to $30 from $37 -- though Leerink upped its price target to $35 from $30. Meanwhile, options volume is exploding, at 20 times expected intraday levels.

Calls and puts are both seeing heavier-than-usual demand, with the former outstripping the latter on an absolute basis. In terms of specific strikes, VEEV's March 25 and 26 calls are seeing buy-to-open activity, as speculators roll the dice on a rebound by the close on Friday, March 20, when front-month options expire. However, the most active strike is the March 25 put, with traders initiating long positions in hopes the underlying will dip below the quarter-century mark over the next nine days.

Elsewhere, one group that's likely celebrating VEEV's pullback is short sellers. Short interest has risen 10.3% since the start of the year, and now makes up 15.1% of the stock's total float. At the equity's typical trading levels, it would take 11 sessions to cover these bearish bets.

In other news, Veeva Systems Inc (NYSE:VEEV) said last night it will acquire Qforma's Crowdlink in an all-cash deal. The latter specializes in gathering and analyzing data to determine sentiment, trends, and social network behavior.

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