3D Systems Corporation (DDD) China Buy Stirs Option Traders

3D Systems Corporation's (DDD) foray into China has sparked option demand

by Andrea Kramer

Published on Apr 6, 2015 at 1:03 PM
Updated on Jun 24, 2020 at 10:16 AM

3-D printer maker 3D Systems Corporation (NYSE:DDD) is sitting on a healthy gain of 3% at $28.26, as shareholders applaud the firm's purchase of a company in China for an undisclosed sum. Option traders, meanwhile, are gambling on DDD's long-term trajectory, with November-dated contracts of particular interest.

Overall option volume is running at nearly twice the average afternoon clip, though calls are outpacing puts. Most active are the November 27 call and November 26 put, both of which have seen buy-to-open action. Buyers of the calls expect DDD to extend its journey north of $27 through the close on Friday, Nov. 20, when the options expire. The put buyers, on the other hand, expect DDD to retreat beneath $27 within the options' lifetime.

Elsewhere, the equity's weekly 4/10 options are attracting attention, and account for five of the top 10 most popular strikes today. Bulls are apparently buying to open the 27.50- and 29-strike calls, amid hopes for DDD to continue higher through Friday's close, when the series expires. Bears are purchasing the weekly 28-strike puts, expecting DDD to sink beneath $28 by the end of the week.

Prior to today, long puts were growing increasingly popular on DDD. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.93 stands higher than 86% of all other readings from the past year. In the same skeptical vein, short interest accounts for nearly 37% of DDD's total available float, representing close to 19 sessions' worth of pent-up buying demand, at the stock's average pace of trading.

Technically speaking, it's been a rocky road for 3D Systems Corporation (NYSE:DDD) in 2015, with the shares down 13.8%. However, the stock is on pace to close atop its 10-day and 20-day moving averages for the first time since mid-February. What's more, these trendlines just made a bullish cross -- often a signal of short-term technical strength. Should DDD muscle even higher, a mass exodus of option bears or short sellers could add fuel to the stock's fire.


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