YY Inc. (YY) Earnings Beat Doesn't Convince Options Bears

YY Inc (ADR) (YY) traders are buying April puts

Mar 6, 2015 at 2:44 PM
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YY Inc (ADR) (NASDAQ:YY) is 6.7% higher today to $58.85, thanks to a well-received earnings report. Nevertheless, bearish activity in the options pits is ramping up, with some traders skeptical of the company's post-earnings upside.

YY options are moving at six times the usual intraday pace today, with the April 60 put (today's most active contract) seeing buy-to-open activity. By purchasing this put, traders expect the security to dip below the strike price by the close on April 17, when the contract expires. Delta on the April 60 put reads at negative 0.49, implying a 49% chance of expiring in the money. Just yesterday, delta stood at negative 0.65.

Looking back, put buying has accelerated over the last two weeks, as YY came dangerously close to annual-low territory. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 1.84 stands just 9 percentage points away from an annual bearish peak. Meanwhile, short interest accounts for over 15% of YY Inc's (NASDAQ:YY) available float, which would take nearly five sessions to cover, at average daily trading volumes.

Daily Chart of YY Since September 2014
 

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