Bulls Hope to Ride Youku Tudou Inc. (YOKU) Higher

Youku Tudou Inc (ADR) (NYSE:YOKU) is seeing weekly 5/22 calls being bought to open

by Alex Eppstein

Published on May 14, 2015 at 2:58 PM
Updated on Jun 24, 2020 at 10:16 AM

Despite the lack of a clear driver, Youku Tudou Inc (ADR) (NYSE:YOKU) is 16% higher at $22.60. Meanwhile, the Internet TV stock's calls are being exchanged at 12 times the usual intraday clip, and twice the rate of puts.

According to Trade-Alert, the weekly 5/22 21- and 22-strike calls are being bought to open. In other words, the speculators expect YOKU to extend its lead north of the respective strikes through next Friday's close, when the weekly series ceases trading. At-expiration breakeven for the lower-strike calls is $21.87 -- strike plus volume-weighted average price (VWAP) of $0.87 -- while for the higher strike it's $23.11 (strike plus $1.11 VWAP).

This represents a change of pace for YOKU, where puts have typically been far more popular than calls. Per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has racked up a 10-day put/call volume ratio of 5.93 -- with nearly six puts bought to open for every call. What's more, this ratio ranks in the 98th annual percentile.

Short sellers have also keyed in on YOKU. During the past two reporting periods, short interest jumped nearly 47%, and now makes up almost 17% of the stock's float -- or about six days' worth of trading, assuming average volumes.

These skeptics may be feeling the heat this afternoon, given Youku Tudou Inc's (NYSE:YOKU) aforementioned surge. Year-to-date, the shares are now up 27% year-to-date.

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