Demand for SouFun Holdings Ltd (SFUN) Call Options Blows Up

SouFun Holdings Ltd (SFUN) call options are trading at 56 times the expected intraday rate

Alex Eppstein
Jun 14, 2016 at 11:47 AM
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SouFun Holdings Ltd's (NYSE:SFUN) options pits are going wild today. At last check, 24,000 call options were on the tape -- 56 times the expected intraday rate -- while not a single put had been exchanged. In fact, call volume is running in the 100th percentile of its annual range. From the looks of it, traders are gambling on gains for the China-based real estate stock.

Almost all of the options volume is transpiring at the August 5 call, and according to Trade-Alert, it's mostly of the buy-to-open kind. Data from the International Securities Exchange (ISE) also confirms newly purchased positions. The biggest trade consisted of 6,666 contracts, and if it was bought to open, the speculator shelled out a total of roughly $366,000 ($0.55 premium paid * number of contracts * 100 shares per contract). The goal is for SFUN to rally north of $5 by August expiration, while the most call buyers have at risk is the initial premium paid.

This is business as usual for the stock. During the last 10 weeks at the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open nearly 9,000 SFUN calls compared to just 31 puts.

Technically speaking, however, SouFun Holdings Ltd (NYSE:SFUN) has been a disaster. The stock may be up 0.4% today at $4.96, but on a year-over-year basis, it's sunk almost 47%.

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