Options Sizzle as Cardiovascular Systems Inc (CSII) Soars

Cardiovascular Systems Inc (NASDAQ:CSII) options volume is running at 20 times the average intraday pace

Apr 1, 2016 at 12:16 PM
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Cardiovascular Systems Inc (NASDAQ:CSII) projected fiscal third-quarter revenue about 5% above the high end of its previous estimate and announced a round of cost-cutting measures, which includes laying off roughly 8% of its workforce. Additionally, Needham upgraded CSII to "buy" from "underperform." Against this bullish backdrop, shares of CSII are 26% higher at $13.06 -- and traders are making a beeline to the equity's options pits.

Specifically, CSII options volume has jumped to 20 times the average intraday rate on what is typically a lightly traded stock. By the numbers, 847 calls and 95 puts have crossed the tape, compared to an average daily volume of just 95 contracts. In fact, CSII call volume is on pace to notch a new annual high.

Drilling down, almost all of the action has centered on the front-month series, with April contracts accounting for six of CSII's 10 most active options. The April 12.50 call is most active -- with 665 contracts on the tape -- where it looks as if new positions are being purchased. In other words, traders are betting on a bigger rally through the close on Friday, April 15, when front-month options expire.

Meanwhile, today's bull gap is likely catching short sellers off guard. Although short interest declined 14.8% in the two most recent reporting periods, it still accounts for nearly 11% of Cardiovascular Systems Inc's (NASDAQ:CSII) available float -- or almost seven sessions' worth of pent-up buying demand. In other words, short-covering could also be playing a part in today's price action.

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