Etsy Inc (ETSY) Options Traders Take Aim at Higher Highs

Etsy Inc (ETSY) notched an annual high earlier, lighting its options pits on fire

Oct 4, 2016 at 1:41 PM
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Fresh off an annual high of $15.83, Etsy Inc (NASDAQ:ETSY) stock and options volume are running at a rapid rate. Roughly 1.7 million shares have been exchanged -- good for the 91st annual percentile -- while nearly 4,000 options have traded, ranking in the 98th percentile of its 12-month range.

Digging deeper, the now in-the-money November 15 call is the most in-demand strike, and is seeing likely buy-to-open activity. By purchasing the contracts for a volume-weighted average price (VWAP) of $1.41, the traders are hoping to swing a profit on ETSY rallying beyond breakeven at $16.41 (strike plus VWAP) by November expiration. At last check, the stock was up 5.2% at $15.47.

Options speculators have been purchasing fresh calls over puts for a while. ETSY's 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio rests at a top-heavy 2.64. Meanwhile, the stock's short-term open interest levels are tilted toward calls, per the Schaeffer's put/call open interest ratio (SOIR) of 0.31 -- in the low 34th annual percentile.

Fortunately for buyers, the options market is currently pricing in low volatility expectations on near-term strikes. Specifically, ETSY's Schaeffer's Volatility Index (SVI) of 52% is docked below 89% of comparable readings from the prior year -- suggesting options bets can be purchased on the cheap, relatively speaking.

As described above, Etsy Inc (NASDAQ:ETSY) is on fire today. However, traders may want to ready themselves for a potential breather. At last check, the stock's 14-day Relative Strength Index (RSI) has risen past 67, on the brink of overbought territory.

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