Under Armour Inc (UA) Traders Eye an End-of-Week Bounce

Under Armour Inc (UA) is struggling on a pessimistic note from Piper Jaffray

by Alex Eppstein

Published on Nov 30, 2015 at 10:32 AM
Updated on Jun 24, 2020 at 10:16 AM

While Under Armour Inc (NYSE:UA) is a long-term technical titan, it's under pressure this morning after Piper Jaffray cut its price target to $88 from $97, and its per-share profit forecast to 44 cents from 46 cents. The brokerage firm supported its decision by citing retailers' high inventory levels in footwear and athletic apparel, which may lead to discounts in the weeks ahead. At last check, UA is down 3.1% at $86.90.

Amid this swoon, option activity is picking up, running at triple the normal intraday rate. Calls are also easily outstripping puts, with short-term speculators possibly buying to open the weekly 12/4 90- and 92.50-strike calls in the hopes of a bounce by this Friday's close, when the series expires.

Historically, though, long puts have been the options of choice among UA traders. During the past 10 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a put/call volume ratio of 1.38 -- just 2 percentage points from a 12-month peak. Likewise, UA's Schaeffer's put/call open interest ratio (SOIR) sits at an annual high of 1.80. Of course, given the shares' long-term strength, a portion of these put traders may simply be shareholders hedging.

One group that's more clearly bearish is short sellers. One-tenth of UA's float is sold short, representing nearly seven sessions' worth of pent-up buying power, at typical volumes.

As alluded to, Under Armour Inc (NYSE:UA) has been powering its way up the charts, today notwithstanding. Year-to-date, the stock has tacked on nearly 28%. Should this upward trend resume, a capitulation among the skeptics could put some wind into the equity's sails.

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