GrubHub Inc (GRUB) Bulls Hungry for Call Options

GrubHub Inc (GRUB) call options are trading at 10 times their usual intraday pace

Jun 17, 2016 at 2:46 PM
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GrubHub Inc (NYSE:GRUB) is moving higher on bullish options activity. At last check, the food delivery stock was up 4.1% at $30.07, and set for its highest closing price since late October, as investors take their cues from a pair of optimistic options trades. Year-to-date, the shares have now advanced close to 24%.

As alluded to, some interesting activity is transpiring in GRUB's options arena. In particular, more than 5,500 calls have changed hands -- 10 times the expected intraday rate. Most of this action appears to be of the bullish sort. Specifically, it appears that a block of nearly 2,500 September 30 calls was bought to open, and, about an hour later, a 1,500-contract sweep of September 35 calls was bought to open. In other words, at least two traders may be targeting upside moves by September expiration.

This is par for the course when it comes to GRUB options trading. Over the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 3.60 calls for every put. The corresponding call/put volume ratio ranks in the high 86th percentile of its annual range.

At the same time, short interest on GRUB has swelled. During the last two reporting periods, short interest jumped over 20%, and now accounts for 45.5% of the stock's float. At GRUB's typical trading volume, it would take close to three weeks to buy back these bearish bets. And while the shares' standout performance merits the recent rush in call buying, it's also possible short sellers have purchased calls as insurance.

Last of all on the sentiment front, the brokerage crowd has displayed confidence in GrubHub Inc (NYSE:GRUB). Nearly two-thirds of analysts recommend buying the stock, with not a single "sell" rating to be found.

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