Keurig Green Mountain Inc (GMCR) Bulls Make Rare Appearance Amid Rally

Keurig Green Mountain Inc (NASDAQ:GMCR) calls are unusually popular today

Nov 25, 2015 at 2:45 PM
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Call volume has exploded on Keurig Green Mountain Inc (NASDAQ:GMCR) amid an unusual display of technical strength. Over 28,000 calls have traded today, which is three times the average afternoon pace. In fact, today's intraday call volume lands in the 99th annual percentile. 

On a closer look, calls make up nine of GMCR's 10 most popular strikes. Leading the way is the January 2017 60-strike call, which seems to be seeing a mix of buy-to-open and buy-to-close activity, according to data from the International Securities Exchange (ISE). However, the second most popular option is the January 2016 52.50-strike put, where traders are initiating long positions to bet against the coffee brewer, despite today's rally. 

When looking back at previous behavior in GMCR's options pits, today's call bias becomes even more surprising. According to data from the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has accumulated a 10-day put/call volume ratio of 1.06, which is only 5 percentage points from an annual high. In other words, there's been an intense interest in put buying recently. 

In any case, it may not be a bad idea to speculate on GMCR. The equity's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 87. This tells us the stock has tended to make outsized moves during the past 12 months, compared to what the options market has priced in. 

Stepping outside the options arena, short interest represents 12.8% of the stock's float -- or nearly a week's worth of buying power, going by average daily volumes. However, short interest has actually been on the decline during the two most recent reporting periods, falling almost 12% -- which may be why some are attributing today's gains to a short-covering rally

Speaking of those gains, Keurig Green Mountain Inc (NASDAQ:GMCR) has added 8.7% to trade at $53.09, attempting to close above its 50-day moving average for the first time since Oct. 23. Even with the rally, GMCR has forfeited two-thirds of its value since hitting an all-time high of $158.87 last November. 


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