Square Inc (SQ) Options Bear Bets on More Downside

One options trader thinks Square Inc (NYSE:SQ) will continue to slide through June

May 13, 2016 at 2:24 PM
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Square Inc (NYSE:SQ) options traders have historically preferred call options over put options. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 50-day call/put volume ratio of 1.69. Moreover, SQ's Schaeffer's put/call volume ratio (SOIR) comes in at 0.94, meaning call open interest tops put open interest for near-term options. Things are unfolding somewhat differently today, though. 

More than 8,400 SQ put options have traded so far today -- three times the intraday norm and nine times the number of calls. Much of the action appears to be due to one trader who rolled 3,500 May 15 puts down and out to the June 11 strike. With the back-month options set to expire at the close of Friday, June 17, it looks like this options bear is betting on extended losses for SQ over the next month.

SQ isn't a stranger to Wall Street's skepticism. Short interest is elevated on the stock, with short sellers controlling seven days' worth of buying power, going by SQ's average daily trading volumes. Analysts are also downbeat, with nine of the 15 that cover the stock deeming it a "hold" or "strong sell." 

Most of this bearishness was already in place before Square Inc's (NYSE:SQ) post-earnings nosedive earlier this month, too. As it stands now, SQ has lost 40% since its all-time high of $15.91 back in March. Still, the stock is 2.7% higher today at $9.53, even after Laker legend Magic Johnson resigned from Square's board

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