Groupon Inc (GRPN) Options Trader Eyes Another Earnings Blowout

Groupon Inc (GRPN) will report earnings next Wednesday night

Oct 20, 2016 at 12:54 PM
facebook X logo linkedin

Groupon Inc (NASDAQ:GRPN) options are flying off the shelves this afternoon. This is especially true on the call side of the aisle, where the contracts are running at seven times the usual intraday pace -- and set to register in the 98th annual percentile. From the looks of it, one options trader is setting his sights on some major short-term upside, possibly in the wake of an earnings win next week.

Diving right in, twin 5,500-contract blocks at the weekly 10/28 5- and 6-strike calls changed hands this morning. According to Trade-Alert, the speculator bought to open the lower-strike lot and sold to open the higher, amounting to a bull call spread -- essentially a lower-risk/lower-reward way to bet bullishly on a stock, compared to simply buying a call. The net debit on each spread was $0.33, resulting in a total cash outlay of more than $180,000 (net debit * number of contracts * 100 shares per contract).

By initiating these positions, the trader is betting on GRPN surging north of $6 -- annual-high territory -- by next Friday's close, when the weekly series expires. The company is slated to report earnings on Wednesday, Oct. 26. If, however, the shares settle below $5, the speculator risks losing the entirety of his initial cash layout. At last check, the stock was down 0.1%, hovering directly on the round $5 level.

Groupon calls have been extremely popular lately. The stock's 20-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at a top-heavy 6.20, with long calls outstripping puts by a more than 6-to-1 margin. Echoing this, GRPN's Schaeffer's put/call open interest ratio (SOIR) of 0.30 rests in the bottom quartile of its annual range, suggesting short-term calls have been strongly preferred over puts on both an absolute and relative basis.

GRPN's long-term performance hasn't done anything to temper bullish expectations, either. Year-to-date, the shares have sizzled to a nearly 63% advance. And with earnings around the corner, another huge move could be in the cards -- which the bull call spread trader obviously hopes will resolve to the upside.

Twice this year, Groupon Inc (NASDAQ:GRPN) shares have rocketed to a 29% single-day gain in the session subsequent to earnings, which bodes well for bulls. Of course, sandwiched in between those performances was an 18.3% post-event loss.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical levels, and top economic stories straight to your inbox.


Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on calls
238.5% GAIN on Oracle calls



Rainmaker Ads CGI