Momo Inc (MOMO) Options Heat Up as Stock Cools Post-Earnings

Momo Inc (MOMO) options are trading at a blistering pace

Nov 8, 2016 at 11:54 AM
facebook X logo linkedin


Social network Momo Inc (ADR) (NASDAQ:MOMO) is among several stocks getting clobbered after earnings. After earlier racing to a record high of $28.44 -- thanks to the company's quarterly results, which came in above estimates -- the shares inexplicably reversed lower. MOMO was last seen down 11.3% at $23.71 and short-sale restricted, with both stock and options volume running in their respective 100th annual percentiles.

Looking more closely at the options action, both puts and calls are being exchanged at five times the usual intraday rate. On an absolute basis, puts hold a narrow edge over calls, and the most active put is the December 22.50 strike. Several signs suggest traders are buying to open positions here, anticipating MOMO will breach $22.50 by December expiration.

Taking a step back, puts have been the options of choice among traders in recent weeks. While MOMO's 10-day put/call volume ratio of 0.62 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is call-heavy on an absolute basis, it ranks above four-fifths of all readings from the prior year. In other words, relatively speaking, speculators have been purchasing puts over calls at a quicker-than-usual clip.

Now appears to be a good time to purchase premium on short-term options, too. The stock's Schaeffer's Volatility Scorecard (SVS) checks in at a high 88, suggesting MOMO has tended to make bigger moves than the options market has priced in over the past year.

As mentioned previously, despite Momo Inc's (ADR) (NASDAQ:MOMO) reversal lower, the stock managed to hit an all-time high early on. It's also worth noting that, in spite of the intraday deficit, the shares have still easily outperformed the market over the long haul. Year-to-date, MOMO stock has flown 48% higher.

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 C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI