Monster Beverage Corporation (MNST) Call Players Climb On Board

Monster Beverage Corp (NASDAQ:MNST) calls are trading at four times the average intraday pace

Jun 26, 2015 at 2:48 PM
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Monster Beverage Corp (NASDAQ:MNST) is up 1.6% today to trade at $138.38. While rumors are swirling that The Coca-Cola Co (NYSE:KO) -- which already owns a 17% stake in MNST -- could be interested in the energy drink issue, today's rise is most likely due to a price-target hike to $167 from $166 at Cowen and Company, territory yet to be traveled. Regardless, near-term option traders are rolling the dice on more upside, with calls crossing the tape at four times the average intraday pace.

Diving deeper, weekly calls are hot today, with buy-to-open activity detected at the 6/26 and 7/2 138 strikes. Meanwhile, longer-term traders are potentially purchasing new positions at the August 135 and 165 calls. By initiating the long calls, speculators expect MNST to settle north of the strikes at the respective expiration dates.

Widening the sentiment scope reveals traders have shown a preference for puts over calls among options slated to expire in three months or less. In fact, MNST's Schaeffer's put/call open interest ratio (SOIR) of 1.47 sits just 2 percentage points from a 52-week peak, meaning speculative players have rarely been as put-skewed as they are now.

In any event, those purchasing near-term options are in luck. MNST's Schaeffer's Volatility Index (SVI) of 22% sits lower than 99% of all similar readings taken in the past year. Simply stated, premium on the stock's short-term options is pricing in extremely low volatility expectations at the moment.

Outside of the options pits, sentiment among the brokerage bunch is lukewarm. More than 57% of analysts covering the shares maintain a "hold" recommendation, while the average 12-month price target of $149.50 stands at a 8% premium to current trading levels. Should Monster Beverage Corp (NASDAQ:MNST) extend its nearly 28% year-to-date lead, another round of bullish brokerage notes could be on the horizon.


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