Traders Place Bold Bets on Surging Skullcandy, Inc. (SKUL)

Skullcandy Inc (SKUL) has spiked 6% this afternoon on positive analyst attention

Digital Content Group
Apr 2, 2015 at 1:42 PM
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A price-target boost to $17 from $14 at Jefferies has Skullcandy Inc (NASDAQ:SKUL) sitting 6% higher this afternoon at $11.53. (The analysts also waxed optimistic on this soaring drugmaker.) In turn, bullish traders have swarmed the headphone maker's options pits, where calls are crossing at nine times what's expected at this point in the day. By the numbers, nearly 1,450 calls are on the tape, versus just four puts.

Looking more closely, almost all of the intraday volume is transpiring at the June 13 call. From the looks of it, a number of positions are being bought to open here -- a theory echoed by data from the International Securities Exchange (ISE). In other words, these option bulls expect SKUL will topple $13 by June options expiration.

Turning to the charts, the shares haven't sniffed the north side of $13 since October 2012. As such, delta on the out-of-the-money call is just 0.33, signifying a roughly 1-in-3 chance the option will be in the money at expiration. However, SKUL shouldn't be underestimated -- the stock has added an impressive 20% on a year-over-year basis, and is within a chip-shot of its multi-year high of $11.83, tagged on March 6.

On Wall Street, about 64% of the analysts covering Skullcandy Inc (NASDAQ:SKUL) rate it a "strong buy," with the remaining brokerage firms sporting "hold" or worse recommendations. In addition, the security's average 12-month price target of $12.61 stands at a 9.4% premium to current trading levels.

 

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