TD Ameritrade Holding Corporation (AMTD) Rally Ropes in Bulls

TD Ameritrade Holding Corp. (AMTD) reached a 15-year high earlier


Published on Mar 6, 2015 at 2:26 PM
Updated on Apr 20, 2015 at 5:32 PM

TD Ameritrade Holding Corp. (NYSE:AMTD) is following its sector peers higher this afternoon, up 3.1% at $37.78 on this morning's jobs report, which has amplified expectations for a Fed rate hike. Earlier, in fact, the stock touched a nearly 16-year high of $38.74. Not surprisingly, options traders have taken notice of the uptrend -- and are rolling the dice on higher highs.

By the numbers, more than 5,400 AMTD calls are on the tape -- 13 times the expected intraday amount, and five times the number of puts exchanged so far. Per data from Trade-Alert, speculators are buying to open April 39, May 40, and August 39 calls. In other words, these bulls are confident that AMTD will reach new decade-plus levels by the respective expiration dates.

Today's call buying is just more of the same when it comes to outperforming AMTD. During the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has racked up a call/put volume ratio of 2.20. Not only does this indicate calls have been bought to open at more than twice the rate of puts, but the ratio also ranks in the 94th percentile of its annual range.

Meanwhile, TD Ameritrade Holding Corp. (NYSE:AMTD) could have more gas in the tank, should short sellers hit the exits. Although short interest declined by 46.9% during the past two reporting periods, these bearish bets still account for more than 10 million AMTD shares. At the stock's average pace of trading, it would take close to a week to repurchase these pessimistic positions -- ample fuel for a short squeeze.

Monthly Chart of AMTD since July 1999

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