Put Buyers Swarm Zillow Group, Inc. (Z) After Guidance

Zillow Group Inc (Z) is on the short-sale restricted list

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Published on Apr 14, 2015 at 10:55 AM
Updated on Apr 20, 2015 at 5:32 PM

Trading on Zillow Group Inc (NASDAQ:Z) was briefly halted earlier as the company held a conference call in which it announced weaker-than-expected guidance. While trading has resumed, the shares are significantly lower, earning them a place on the short-sale restricted list. In turn, put volume has soared, as speculators seek an alternate route to bet bearishly on Z.

Over 13,000 puts have changed hands on the real estate stock so far -- 13 times what's expected at this point in the morning. One strike that appears to be seeing buy-to-open activity is the April 90 put, as bettors wager on an extended move south of $90 through week's end, when front-month options expire.

Not everyone's so gloomy on Z's short-term prospects, though. In fact, the most active strike is the April 80 put, where some contracts are being sold to open. In other words, these put writers expect the equity to maintain a foothold north of the round-number level through Friday's close.

There seems to be some logic in that approach. Earlier -- to the delight of short sellers -- Z plunged to an annual low of $81.07 before taking a sharp bounce, with the stock last seen down 4.8% at $88.49.

On the fundamental front, all hope is not lost. During the aforementioned conference call, Zillow Group Inc (NASDAQ:Z) CEO Spencer Rascoff attributed the disappointing guidance to "some decisions to establish our foundation for growth," and said "this year lays the foundation for an incredibly bright 2016 and 2017."

1 Minute Chart of Z since Monday April 13


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