Pandora Media Inc (P) Calls Stay Hot as Stock Soars

Pandora Media Inc (P) is powering higher, potentially rewarding recent call buyers

by Alex Eppstein

Published on Nov 25, 2015 at 11:24 AM
Updated on Nov 25, 2015 at 11:46 AM

While the broader market has traded in a tight range, Pandora Media Inc (NYSE:P) popped out of the gate and hasn't looked back. Shares of the Internet radio company were last seen 4.4% higher at $13.81, after the Register of Copyrights declined to weigh in on differentiated royalty rates for music webcasting. As such, activity has been ramping up in the stock's options pits.

At last check, calls were running at 1.5 times the expected intraday rate, and almost doubling puts. Most active by far is P's January 2016 15-strike call, where a pair of big blocks totaling 6,000 contracts have been exchanged -- and are tied to stock, according to Trade-Alert.

Pandora calls have long been the options of choice at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Across those exchanges, traders have bought to open more than six calls for every put during the past two weeks. The resultant call/put volume ratio of 6.12 outstrips 69% of comparable readings from the prior year.

Echoing this is P's Schaeffer's put/call open interest ratio (SOIR), which stands at 0.48. For one, this ratio indicates calls more than double puts among options with a shelf-life of three months or less. For another, the SOIR rests just 3 percentage points from a 12-month low.

By no means is this optimism universal -- nor would we expect it to be, given Pandora Media Inc's (NYSE:P) late-October bear gap and 35% quarter-to-date deficit. In fact, 13.7% of the stock's float is sold short, and close to half of the analysts tracking the shares consider them a "hold" or worse.

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