Zulily, Inc. (ZU) Traders Place Hail Mary Bets

Zulily Inc (ZU) has dropped 44% in 2015

Digital Content Group

Mar 27, 2015 at 1:33 PM

Over the past couple weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Zulily Inc (NASDAQ:ZU) calls have been changing hands at an extreme rate. Specifically, the e-commerce hub's 10-day call/put volume ratio across this trio of exchanges stands at an annual high of 83.50.

That trend is continuing today, with ZU calls trading at nearly triple the usual intraday clip, and about twice the pace of puts. Eleventh-hour bulls are active, as the stock's most popular option is the weekly 3/27 13.50-strike call, where new positions are being purchased. In other words, these call buyers anticipate ZU will muscle atop $13.50 by tonight's close, when the weekly series expires.

This is an ambitious bet, given the call's short life span. ZU -- up just 0.2% to trade at $13.05 -- would need to gain more than 3.4% in less than three hours for the option to move into the money.

Also, from a longer-term technical perspective, Zulily Inc (NASDAQ:ZU) has been a dud. Just three months into 2015, the shares have plummeted 44% -- largely the result of an earnings-induced bear gap in mid-February.

Follow @Schaeffers

The $25K Day Trading Barrier is Gone

The long-standing Pattern Day Trader (PDT) rule that required many traders to maintain a $25,000 account balance is no longer standing in the way.

That means more traders can actively pursue short-term opportunities without the barrier that kept so many on the sidelines.

Now it's all about having the right strategy.

Dynamite Day Trading Signals helps you hit the ground running with up 2 options trade alerts per week, built to capture fast-moving opportunities.

👉 Sign up now to receive the next trade