Put Volume Explodes as Barnes & Noble, Inc. (BKS) Plummets

News of a CEO ouster has Barnes & Noble, Inc. (BKS) tumbling

Aug 17, 2016 at 2:09 PM
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Bookseller Barnes & Noble, Inc. (NYSE:BKS) plunged out of the gate on news the company's CEO, Ronald Boire, is leaving, after its board deemed him not a "good fit" for BKS. The firm also unveiled its new e-reader this morning -- the Samsung Galaxy Tab A NOOK -- but this has done nothing to lift the shares, which were last spotted off 12.1% at $11.76. With the stock planted firmly on the short-sale restricted list, action is exploding in BKS' options pits.

At last check, puts were changing hands at a whopping 36 times the average intraday rate -- though that isn't saying much, considering BKS options volume is generally light on an absolute basis. Today's action has put volume docked in the 98th percentile of its annual range, however, with the now-in-the-money September 12 put taking the most active spot.

More broadly speaking, traders have shown a preference for calls over puts among options set to expire in three months or less. Specifically, BKS' Schaeffer's put/call open interest ratio (SOIR) of 0.78 ranks in the 30th percentile of its annual range.

The brokerage bunch, meanwhile, has taken a glass-half-full approach to the security. While just two analysts currently track the stock, both maintain a "strong buy" rating. Plus, the average 12-month price target of $17.88 stands at level the shares of BKS haven't touched in a year.

While short sellers are stuck on the sidelines today, these bearish bets have actually been dropping in recent months. In fact, short interest fell by nearly 19% during the two most recent reporting periods, though it still accounts for almost 10% of BKS' total float. And at the stock's average daily volume, it would take nine full sessions to buy back all these pessimistic positions.

On the technical front, BKS has had a rocky time over the past 12 months, dropping nearly 32%. Still, the shares have managed to gain back an impressive 62% since hitting a three-year low of $7.25 in early February. With today's drop, though, Barnes & Noble, Inc. (NYSE:BKS) finds itself back below the $12-$12.50 range, which has alternately served as support and resistance earlier this year, as well as its 50-day moving average, which capped the shares' gains through May and June.

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