PJT Partners Inc (PJT) Options Hot on Securities Fraud Scandal

A prominent PJT Partners Inc (NYSE:PJT) employee was arrested for securities fraud on Monday

by Josh Selway

Published on Mar 28, 2016 at 1:31 PM
Updated on Jun 24, 2020 at 10:16 AM

Investment bank PJT Partners Inc (NYSE:PJT) has taken an 11% dive to trade at $23.65 -- earlier touching an all-time low of $19.96 -- after former managing director, Andrew Caspersen, was charged with securities fraud to the tune of roughly $95 million. Caspersen has since been fired. PJT's stock volume has already surged to an annual high, while the sudden drop has put the stock on the short-sale restricted list -- and has its options seeing a rare pop in activity. 

Looking back, just a 154 calls and puts combined were bought to open during the last 50 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Today, nearly 1,200 PJT options have traded -- a 52-week peak -- and it appears several traders are expecting a bounce back from the shares. 

For example, the April 22.50 and 25 calls are the most active options today, and it's possible speculators are buying to open the strikes. If this is the case, they're betting on PJT to recover from today's downfall and move higher before the front-month options expire at the close on Friday, April 15. 

While shareholders are no doubt stunned by today's developments, short sellers have to be happy. Roughly 1.06 million PJT shares are sold short, resulting in a short-interest ratio ratio of 6.9. In other words, it would take the stock's short sellers almost seven sessions to cover their positions, at average daily volumes. 

Technically speaking, PJT Partners Inc (NYSE:PJT) had recovered some from its February lows below $23, and entered the month trading at year-to-date highs near $28.60. With today's losses, however, the stock's year-to-date deficit stands at 16.4%. 

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