Option Bears Blitz Battered Endurance International Group Holdings, Inc. (EIGI)

Endurance International Group Hldgs Inc (EIGI) puts are flying off the shelves after a Gotham City report

Apr 28, 2015 at 1:50 PM
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Endurance International Group Hldgs Inc (NASDAQ:EIGI) took a turn for the worse in morning trading, and was last seen 17.3% lower at $18.19. Sparking the downturn -- and sending the stock to the short-sale restricted list -- was a report from Gotham City Research that suggested EIGI will drop to zero, as earnings margins don't cover debt. Against this backdrop -- and despite Endurance's statement that the "claims in this 'report' are baseless and not rooted in reality" -- option bears are blitzing EIGI today.

Intraday put activity is running at nearly 200 times the norm, with roughly 22,000 contracts traded. On the flip side, fewer than 1,300 EIGI calls have changed hands. What's more, the stock's 30-day at-the-money implied volatility jumped to an annual high of 74%, spiking 4.1%.

Garnering the most attention has been the May and June 15 puts, where buy-to-open action has been detected. By purchasing the puts to open, the buyers expect EIGI to breach $15 -- territory not charted since mid-November -- by the respective expiration dates of May 15 and June 19.

Prior to today, Endurance International Group Hldgs Inc (NASDAQ:EIGI) was an outperformer, besting the broader S&P 500 Index (SPX) by 23.5 percentage points during the past three months. In fact, the stock notched an all-time best of $23.49 just last week. Still, short-term traders were paying up for their bets on EIGI, as the stock's Schaeffer's Volatility Index (SVI) stood at 78% -- in the 100th percentile of its annual range.

 

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