Vipshop Holdings Limited (VIPS) Traders Switch Sides Ahead of Earnings

Vipshop Holdings Ltd - ADR (NYSE:VIPS) put volume pops ahead of tonight's quarterly earnings report

by Karee Venema

Published on May 13, 2015 at 11:16 AM
Updated on Jun 24, 2020 at 10:16 AM

Speculators are flooding Vipshop Holdings Ltd's - ADR (NYSE:VIPS) options pits today -- ahead of tonight's first-quarter earnings results -- with the contracts changing hands at 16 times the average intraday pace. By the numbers, calls have the edge over puts, with 19,000 of the former and 18,000 of the latter on the tape at last check.

However, seeing the most action thus far is the equity's June 20 put, where 8,609 contracts have been exchanged. It seems safe to assume new positions are being purchased here -- a theory echoed by data from the International Securities Exchange (ISE). In other words, traders are betting on the stock to breach the round-number $20 mark by the close on Friday, June 19, when front-month options expire.

From a wider sentiment perspective, VIPS calls have been the options of choice in recent weeks. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 2.59 rests in the 79th annual percentile. Simply stated, calls have been bought to open over puts at a faster-than-usual clip.

The optimism among option traders aligns more closely with the stock's technical trajectory. Over the past 52 weeks, in fact, shares of Vipshop Holdings Ltd (NYSE:VIPS) have rallied more than 78% -- thanks in part to a well-received earnings report in mid-February. Today, the security is up 3.7% at $26.72, after the company publicly responded to recent short-seller allegations. As such, it's possible some of this morning's put buying is a result of shareholders protecting paper profits against a post-earnings pullback.

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