Cyber Monday Sales Records Bring Out Groupon Inc (GRPN), Wayfair Inc (W)​ Bulls

Groupon Inc (NASDAQ:GRPN) and Wayfair Inc (NYSE:W) both delivered blowout Cyber Monday figures, and now option bulls are taking action

by Josh Selway

Published on Dec 2, 2015 at 2:15 PM
Updated on Dec 2, 2015 at 2:17 PM

Despite some technological issues faced by a handful of companies, it appears Cyber Monday was a wild success, with records being broken across the board. In fact, two online vendors, Groupon Inc (NASDAQ:GRPN) and Wayfair Inc (NYSE:W)​ recently announced record sales figures. Let's take a closer look at these surging e-commerce names.

GRPN was last seen 3.7% higher at $2.97, as the shares enjoy their best day since gapping lower early last month -- though today's gains have been capped by the stock's 32-day moving average. Still, that hasn't stopped option bulls from placing bets.

On a closer look, GRPN calls are changing hands at 1.4 times the average afternoon pace. It appears some traders are buying to open the February 3.50 call, in hopes the shares will top the strike before the contracts expire at the close on Friday, Feb. 19. 

This preference for calls is nothing new, though. Looking at data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GRPN has amassed a staggering call/put volume ratio of 17.71 over the past 10 days. Not only does this mean almost 18 calls have been bought to open for every put, but the reading also tops 85% of all others from the past year. 

It's still important to point out that short interest is elevated on Groupon Inc, accounting for over 15% of the stock's float. As such, it's possible some of this call buying has been from short sellers hedging their positions going into the holiday season -- especially since the shares have already lost over three-fifths of their value in 2015.

Meanwhile, has shot 12.1% higher to $42.51, and is now on pace to close above its 20-day moving average for the first time since Nov. 9. Outperformance is nothing new for the equity, though. The shares have more than doubled in value since the start of the year. 

In the options arena, call volume is running at twice the rate expected. One strike seeing potential buy-to-open activity is the February 45 call. In other words, traders anticipate extended gains from the shares through February expiration. 

Unlike GRPN, W option traders had been more interested in put buying than call buying leading up to today. The stock's 10-day put/call volume ratio at the ISE, CBOE, and PHLX comes in at 2.18, which beats out 63% of all similar readings from the past 12 months. 

This activity may indicate hedging, though in a different way than GRPN. That is, considering Wayfair Inc's long-term success on the charts, some traders may be using puts to protect their paper profits

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