Short-Term Bulls Take a Stab at Keurig Green Mountain, Inc. (GMCR)

Keurig Green Mountain Inc (GMCR) is 20% below the average price target among analysts

by Josh Selway

Published on Apr 30, 2015 at 2:14 PM
Updated on Jun 24, 2020 at 10:16 AM

Keurig Green Mountain Inc (NASDAQ:GMCR) has struggled recently. Year-to-date, the shares have fallen nearly 12%, and underperformed the S&P 500 Index (SPX) by nearly 12 percentage points during the past three months. Today, however, the security is gaining, adding 2% to trade at $116.59, as it attempts to overcome its 40-day moving average for the first time in a little over a month. In GMCR's options pits, traders are betting on extended gains, as calls are changing hands at a 30% mark-up to normal intraday rates.

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Looking closer, speculators are targeting the coffee maker's weekly 5/1 series, with seven of its 10 most popular contracts expiring at the close this Friday. The numbers suggest buy-to-open activity is transpiring at the weekly 5/1 116- and 117-strike calls. These traders are betting on gains above the respective strikes by week's end.

As was mentioned, the equity hasn't exactly been lighting it up on the charts, but short-term options traders have continued to exchange calls, nonetheless. GMCR's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.84, indicating call open interest outnumbers put open interest among options that expire in three months or less. Additionally, this ratio lands in bottom third of all readings taken in the past year, revealing the stock's short-term speculators are more call-skewed than normal.

Analysts also have high hopes for Keurig Green Mountain Inc (NASDAQ:GMCR). The security's consensus 12-month price target of $139.92 represents a 20% premium to current levels, and territory not charted since December. With all this in mind, it's possible that GMCR could see headwinds if option trader sentiment shifts, or analysts begin to cut their price targets.


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