Options Volume Explodes as Rent-A-Center Stock Spikes

Rent-A-Center rejected Vintage Capital Management's $15-per-share buyout offer

Jul 11, 2017 at 1:34 PM
facebook X logo linkedin

Shares of Rent-A-Center, Inc. (NASDAQ:RCII) have jumped 9.8% to trade at $12.19, after the furniture leasing company said it rejected a $15-per-share buyout bid from privately held Vintage Capital Management, calling the offer "inadequate and opportunistic." While stock volume has spiked to its highest perch since June 7, RCII options volume is running hot, too, and is on track to settle in the 100th annual percentile.

By the numbers, 11,434 puts and 16,938 calls have changed hands -- 20 times what's usually seen at this point in the day. Most active is the September 10 put, where it looks like options traders are buying to open new positions. If this is the case, the goal is for RCII to retreat to single digits over the next two months. Given today's big gains, this could also be indicative of an options hedging strategy by Rent-A-Center shareholders.

On the call side, the September 15 strike has seen the most action. It's possible speculators are selling to open positions here, betting on Vintage Capital's per-share buyout offer to serve as a short-term hurdle for the shares. 

Whatever the motive, the 10 strike has been popular on RCII. Specifically, the December and September 10 puts are home to the stock's top two open interest positions, with a collective 31,621 contracts currently outstanding.

On the charts, RCII stock has rebounded since hitting a 15-year low of $7.76 in late January. More recently, the shares ran into a familiar ceiling in the $13.20-$13.30 neighborhood in mid-June, but pulled back to their 80-day moving average and bounced.

And while a 35.6% decline in short interest between the April 15 and June 15 reporting periods probably helped push the stock higher over this time frame, it's likely a continued round of short covering is helping today's rally, too. Despite the recent drop in bearish bets, short interest still accounts for 38.2% of RCII stock's available float, or 8.6 times the average daily pace of trading.

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