Solid Earnings Report Leaves Wayfair Inc. (W) Bears Unfazed

Despite today's solid earnings report, Wayfair Inc (W) puts are popular

by Griffin Kruse

Published on Mar 4, 2015 at 2:41 PM
Updated on Jun 24, 2020 at 10:16 AM

After announcing a narrower-than-expected fourth-quarter loss, Wayfair Inc (NYSE:W) is up over 16% to reach $29.38, bringing the stock's year-to-date gain to 47.9%. What's more, the stock is currently perched firmly above its 10-day moving average, which has served as support since the beginning of February. However, put-buying activity in the stock's options pits has been ramping up.

Drilling down, puts are running at eight times the usual intraday pace today, and outpacing calls by a nearly 3-to-2 margin. Garnering notable attention is W's April 25 put, where buy-to-open activity has been detected. By purchasing this put, traders expect the security to finish south of $25 by the close on Friday, April 17, when the contract expires. Given the stock's standout technicals, though, a portion of these long puts may have been at the hands of shareholders hedging. Delta on the out-of-the-money put is negative 0.21, implying the option has a 21% chance of expiring in the money.

From a broader perspective, short selling ramped up over the past two reporting periods, increasing by nearly 7%. Presently, 33.1% of Wayfair Inc's (NYSE:W) available float is sold short, which would take over 15 sessions to cover, at average trading volumes.

Daily Chart of W Since November 2014 With 10-Day Moving Average

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