Option Bulls Pounce On Soaring Pandora Media Inc (P)

A copyright ruling has attracted Pandora Media Inc (P) call buyers

Sep 21, 2015 at 11:23 AM
facebook X logo linkedin


The shares of Pandora Media Inc (NYSE:P) were temporarily halted -- twice -- for volatility, and the stock was last seen 6.5% higher at $20.98, after peaking at an intraday (and year-to-date) high of $22.60. After rampant speculation on StockTwits -- with some hoping for a bid from Apple Inc. (NASDAQ:AAPL) -- Pandora just confirmed a copyright royalty win. Against this backdrop, option bulls are bombarding P in early trading. 

P options are flying off the shelves at four times the average intraday pace, though call volume has more than doubled put volume thus far. Most active is the weekly 10/9 19.50-strike call, where implied volatility has surged 17.1 percentage points. It looks like buyers are picking up the short-term calls to gamble on more upside for P in the next few weeks.

Specifically, buyers who purchased the call at a volume-weighted average price (VWAP) of $0.92 will make money the higher P soars north of $20.42 (strike plus VWAP) by the close on Friday, Oct. 9, when the weekly options expire. Risk is capped at the initial premium paid for the contracts, should Pandora backpedal beneath the strike within the options' lifetime.

Today's appetite for bullish bets merely echoes the growing trend, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio sits at a lofty 9.46 -- above 87% of all other readings from the past year. In simpler terms, option buyers have picked up P calls over puts at a much faster-than-usual clip during the past two weeks.

Prior to today, P's short-term contracts could be had at a relative discount. The stock's Schaeffer's Volatility Index (SVI) sat at 51% -- above just 23% of all other readings from the past year. Today, though, P's 30-day at-the-money implied volatility has surged to 73.8%, just a percentage point from an annual high. For comparison, Pandora Media Inc's 30-day historical volatility sits at 34.8%, suggesting the equity's short-term options are pricing in a bigger-than-usual move.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI