Call Volume Explodes as Etsy Inc (ETSY) Breaks Out

Etsy Inc (NASDAQ:ETSY) call volume is running at 90 times the average intraday pace

Jul 12, 2016 at 2:45 PM
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Etsy Inc (NASDAQ:ETSY) is soaring, with some speculating the stock is getting a lift from the hype surrounding Amazon.com, Inc.'s (NASDAQ:AMZN) Prime Day. While AMZN stock is failing to capitalize on the buzz, shares of ETSY were last seen up 7.4% at $10.43. Regardless of the reason, ETSY call volume is running at 90 times what's typically seen at this point in the day, with a number of option traders eyeing an extended stay in double-digit territory.

By the numbers, more than 15,000 call options have changed hands so far, compared to fewer than 400 put options. Almost all of the action has centered at ETSY's September 10 call, where 10,525 contracts are on the tape. Trade-Alert suggests these now in-the-money calls are being bought to open, meaning speculators are betting the stock will continue to rally north of $10 over the next two months. What's more, should these calls translate into new positions overnight, it will more than double ETSY's current call open interest.

More broadly speaking, ETSY's options pits have been relatively bare, with the stock sporting an average daily volume of just 255 total contracts. Across the major exchanges, though, the tendency has been toward long calls over puts in recent months. Specifically, the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at a top-heavy 7.28, and arrives in the 80th annual percentile.

Echoing this call-skewed backdrop is ETSY's Schaeffer's put/call open interest ratio (SOIR) of 0.35. Not only does this show that calls almost triple puts among options expiring in three months or less, but it ranks lower than 79% of all comparable readings taken in the past year. Simply stated, short-term speculators are more call-heavy than usual toward the stock.

Technically, ETSY has been a long-term laggard, down more than 35% year-over-year. However, thanks to today's surge, the shares of Etsy Inc (NASDAQ:ETSY) are on pace to close north of the round $10 level for the first time since Nov. 3.

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