Options Bulls Attack as Etsy Inc (ETSY) Finds Support

Etsy Inc's (NASDAQ:ETSY) March 15 call has been targeted by options buyers this week, as the retail stock slides

Dec 2, 2016 at 3:00 PM
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Etsy Inc (NASDAQ:ETSY) is seeing an influx of options trading today, with 7,505 contracts on the tape -- eight times the expected intraday amount of 913. Calls are the options of choice on the retail stock, with 5,769 traded at last check -- seven times what's typically seen at this point in the day -- compared to fewer than 1,800 puts. Speculative players appear to be betting on a longer-term breakout for ETSY stock, with the March 15 call seeing a third straight day of interest from options traders.

Drilling down, roughly 5,300 March 15 calls have changed hands in today's trading, the most active ETSY option thus far. It seems safe to assume new positions are being purchased here -- a theory echoed by Trade-Alert. If this is the case, the goal is for ETSY stock to surge north of $15 by March options expiration.

As noted, this activity continues a recent trend, with 3,081 new positions initiated at the March 15 call over the past two sessions. Should today's volume translate into open interest overnight, it could create the top open interest position across all of ETSY's options series -- surpassing the December 15 call, which currently has 5,787 contracts outstanding.

Amid this rush of call buying, ETSY's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) has swelled to 187.71 from where it settled last week, at 28.80. What's more, the current ratio ranks just 4 percentage points from a 52-week peak, meaning long calls have been initiated relative to puts at a near-annual-high clip.

On the charts, the shares have retreated 27% since hitting an annual high of $16.05 in early October. This week, the stock has been sliding along with several of its sector peers -- down 10.6% to trade at $11.70, even as Cyber Monday sales hit a record high. Nevertheless, shares of Etsy Inc (NASDAQ:ETSY) appear to have found a foothold atop their 160-day moving average, which served as support in June and early November. What's more, this trendline just formed a bullish cross with its 320-day counterpart, suggesting a new level of support may be forming near $11.10.

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