Groupon Inc (GRPN) Options Heat Up as Stock Rallies

Groupon Inc (GRPN) options are hot after a $250 million Atairos investment

Apr 4, 2016 at 1:14 PM
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The shares of Groupon Inc (NASDAQ:GRPN) have skyrocketed 11.5% to sit at $4.37, as traders cheer a $250 million investment from independent investment fund Atairos, as well as a potential Comcast Corporation (NASDAQ:CMCSA) partnership. GRPN is now attempting to close the bear gap suffered in early March, and GRPN options are flying off the shelves at a rapid-fire rate.

The stock's 30-day at-the-money implied volatility has spiked 24.5% to 89.1% -- in the 94th percentile of its annual range, reflecting the heightened volatility expectations. Roughly 14,000 calls and 9,800 puts have traded -- five times the average intraday pace. Most active are the May 5 call and June 4.50 put, with some short-term bulls apparently buying to open the weekly 4/8 4.50-strike call. By purchasing the calls to open, the buyers expect GRPN to surge north of $4.50 by Friday's close, when the weekly options expire.

However, today's appetite for GRPN calls is just more of the same. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than 23 GRPN calls for every put during the past two weeks. The resulting 10-day call/put volume ratio of 23.14 stands higher than 89% of all other readings from the past year.

On the charts, it's been quite an adventure for Groupon Inc (NASDAQ:GRPN) during the past couple of months. The equity shot higher in mid-February, thanks to an investment from -- and subsequent takeover rumors regarding -- Alibaba Group Holding Ltd (NYSE:BABA). The equity made it as high as $5.28 in early March, only to backpedal to support atop its 200-day moving average.

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