FXCM Inc. (FXCM) Rally Sparks Fresh Wave of Call Buying

FXCM Inc (FXCM) bulls are betting on an extended rally

by Josh Selway

Published on May 26, 2015 at 11:26 AM

Calls are crossing at seven times the expected intraday pace in FXCM Inc's (NYSE:FXCM) options pits today. By the numbers, over 10,000 calls have been exchanged, versus just under 800 puts. The most popular contract is the June 1.50 call, and it looks like it's being bought to open. In other words, speculators expect the shares to extend gains above $1.50 by the close on Friday, June 19, when front-month options expire.

This is just more of the same from FXCM's option traders, as 7.88 calls have been bought to open for each put during the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This may not all be bullish activity, though. Over 27% of the stock's float is sold short, and would take more than two weeks to repurchase, at average daily volumes. It's likely some of the recent call buying has been from bears hedging their bets. Plus, the equity's low price means there's more upside than downside potential.

There's definitely no love coming from analysts. All four covering brokerage firms say the stock is a "hold" or worse. Plus, FXCM's consensus 12-month price target sits at $1.02 -- territory the shares have never fallen to.

It's not like you can blame the doubters, though, with FXCM Inc (NYSE:FXCM) dropping over 90% of its value in 2015. Still, the stock is trying to fight back, 32.8% higher today at $1.63. The shares could be seeing a lift from Friday's news that the company is purchasing Citigroup Inc's (NYSE:C) foreign-exchange accounts

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