Option Bears Overwhelm Amira Nature Foods Ltd (ANFI) Amid Pullback

A rare batch of option bears is targeting Amira Nature Foods Ltd (NYSE:ANFI) as the stock slides

by Josh Selway

Published on Mar 16, 2016 at 3:13 PM
Updated on Jun 24, 2020 at 10:16 AM

An initial look at Amira Nature Foods Ltd's (NYSE:ANFI) recent option activity would show bulls firmly in control. For instance, more than three calls have been bought to open for every put during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). However, ANFI's 10-day put/call volume ratio across these exchanges has jumped from 0.04 to 0.29 in the past five days, suggesting the popularity of long puts relative to calls has been increasing.

Option bears are even more active today, as puts are outpacing calls by a nearly 5-to-1 margin. In fact, today's put volume arrives in the 99th percentile of ANFI's annual range. The most popular option by far is the April 7.50 put. It's likely traders are buying to open the put in hopes of the shares breaching $7.50 by the close on Friday, April 15, when the contracts expire. ANFI hasn't traded below $7.50 in roughly two months. 

This surge in put buying comes while premiums on near-term options are relatively low. For example, ANFI's Schaeffer's Volatility Index (SVI) of 92% sits in just the 17th percentile of its annual range, meaning short-term options are relatively cheap, from a volatility perspective. 

It's also interesting to point out that while bearish betting has been picking up among the options crowd, it's been declining among short sellers. Short interest on ANFI dropped by almost 19% over the last two reporting periods. Yet, the roughly 2.6 million shares controlled by shorts still represents almost six times the stock's typical daily trading volume. 

Amira Nature Foods Ltd (NYSE:ANFI) had been performing extremely well on the charts until recently, as the shares exploded by over 460% from their all-time low of $2.51 in August to their March 9 high of $14.09. The stock has been getting crushed since then, though, last seen 7.7% lower at $9.83, and earlier finding a home on the short-sale restricted list. It's unclear what's caused the sudden sell-off. 

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