Option Traders, Analysts Eye More Highs For TASER International, Inc. (TASR)

TASER International, Inc. (NASDAQ:TASR) is now up 60% in 2016

by Josh Selway

Published on Jul 8, 2016 at 11:34 AM
Updated on Jun 24, 2020 at 10:16 AM

U.S. stocks are roaring higher today, following this morning's impressive nonfarm payrolls report. On a more somber note, though, some stocks are getting an extra boost from last night's tragic shooting involving Dallas police. Gun stocks, for example, are moving higher, as is body camera specialist Digital Ally, Inc. (NASDAQ:DGLY). Another stock on the rise is stun gun producer TASER International, Inc. (NASDAQ:TASR)​, and options traders are betting more highs are ahead for TASR shares. 

At last check, TASR stock has added 7.6% to trade at $27.72, bringing its year-to-date lead to over 60%. The shares had been hot even before today, though, outpacing the S&P 500 Index (SPX) by 31 percentage points during the past three months.

In the options pits today, call volume is soaring, on pace to hit a 12-month high. For comparison's sake, nearly 7,900 TASR calls have traded -- 15 times the intraday norm -- versus just 570 puts. The most popular option is the August 28 call, followed by the front-month July 27 call. Buy-to-open activity seems likely at each strike, meaning TASR options traders are betting on the stock extending its run through the contracts' respective expiration dates of Friday, August 19, and Friday, July 15. 

Call buying is nothing new from TASR speculators. This is evidenced by the stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which, at 7.84, ranks in the 84th annual percentile. 

Analysts also have an upbeat outlook on TASR stock, with all but one of the covering brokerage firms issuing a "buy" or better recommendation. In fact, J.P. Morgan Securities just raised its price target on the stock this morning to $31 from $26 -- representing territory the shares haven't explored in nearly a year. 

However, not everyone is bullish on TASER International, Inc. (NASDAQ:TASR)​. After edging higher in the previous two reporting periods, short interest on the stock now represents almost 20% of its available float. At TASR's average pace of trading, it would take these bears over three weeks to cover their positions. That means there is certainly ample sideline cash to fuel a short-squeeze rally, should short sellers begin to hit the exits amid extended gains from TASR shares. 

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