World Wrestling Entertainment, Inc. (WWE) Option Bears Ignore Record-Setting Wrestlemania

World Wrestling Entertainment, Inc. (NYSE:WWE) shares are climbing thanks to a record-setting Wrestlemania

Josh Selway

Apr 4, 2016 at 2:42 PM

While new World Heavyweight Champion Roman Reigns celebrates his new title, World Wrestling Entertainment, Inc. (NYSE:WWE) shareholders are celebrating a record attendance for last night's Wrestlemania 32. The stock is 4.8% higher at $18.14 -- though the shares remain in the $16-$19 range that's mostly contained them since early November. Elsewhere, options volume is soaring, and it appears traders are skeptical of WWE's rally.

By the numbers, more than 6,400 WWE put options have crossed -- eight times the expected intraday volume. Most of the action has taken place at the April and May 18 strikes. All signs point to the initiation of long positions, meaning traders are betting on the shares falling back below $18 before the expiration dates at the close on Friday, April 15, and Friday, May 20.

This activity goes against what's normally seen from the stock's options traders. For instance, WWE's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 3.20 -- in the 72nd percentile of its annual range. The stock's Schaeffer's put/call volume ratio (SOIR) of 1.12 echoes this call-focused approach, too, since it's lower than 86% of readings from the past year.

Outside the options pits, WWE has attracted heavy pessimism ahead of this afternoon's post-Wrestlemania conference call. In fact, at 8.9 million shares, short interest on the stock is now at an all-time high. Even more shocking, it'd take these bears over 19 sessions to buy back their positions, at average daily volumes.

As mentioned, World Wrestling Entertainment, Inc. (NYSE:WWE) has mostly traded within a tight $3 range during the past few months. Looking back further, though, the shares have gained almost 36% in the past 12 months. What's more, WWE's recent pullbacks have been contained by the stock's 60-day moving average.

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