Speculators Rush Sina Corporation (SINA) on Cash Infusion

SINA Corp's (NASDAQ:SINA) CEO is investing $456 million in cash into the company, and the stock is soaring as a result

Jun 1, 2015 at 11:26 AM
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SINA Corp (NASDAQ:SINA) said its CEO is pouring $456 million in cash into the company, and as a result, the stock is soaring today. At last check, shares of SINA were up 23% at $50.06, and easily on track to close north of their 320-day moving average for the first time since March 2014. In the options pits, overall volume has jumped to 10 times what's typically seen at this point in the day, with traders split on the security's long- and short-term trajectory.

Call players have set their sights on the $50 mark, with possible buy-to-open activity detected at the June and January 2016 50 strikes. For those purchasing new positions, the goal is for SINA to extend its lead north of the round-number $50 level through the respective expiration dates. Amid today's rally, delta on the front-month strike has jumped to 0.50 from 0.039 at last Friday's close, while delta on the longer-term call has moved to 0.56 from 0.29.

Option bears, meanwhile, are scooping up SINA's weekly 6/5 46.50-strike put -- and it appears as if most of the action is being driven by buyers. If traders are indeed buying to open the puts, the expectation is for the equity to stage a quick retreat, and move south of the strike by Friday's close -- when the weekly series expires.

From a wider sentiment perspective, it's been call buyers who have been active in SINA's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 4.03 rests in the 82nd annual percentile.

Echoing this call-skewed bias is the security's Schaeffer's put/call open interest ratio (SOIR) of 0.48. Not only does this indicate that call open interest more than doubles put open interest among options with a shelf-life of three months or less, but it ranks lower than 92% of similar readings taken in the past year. Simply stated, speculative players have rarely been as call-heavy toward SINA Corp (NASDAQ:SINA) as they are now.

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