Blue Apron Stock Selloff Draws Rare Batch of Call Traders

Competition among meal-delivery service providers is getting stiff

Nov 7, 2017 at 11:36 AM
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Shares of Blue Apron Holdings Inc (NYSE:APRN) are spiraling today, after Weight Watchers (WTW) said it will test a meal-delivery service -- throwing its hat in an increasingly crowded space that includes Amazon (AMZN). At last check, APRN stock was down 16.4% at $3.29, fresh off a record low of $3.24. Nevertheless, call volume is accelerated, with a number of options traders eyeing a quick rebound for the Wall Street freshman.

By the numbers, roughly 2,283 calls have traded on APRN so far -- 1.4 times what's typically seen at this point in the day. For the sake of comparison, just 1,051 puts are on the tape, well below the expected intraday amount of 1,765 contracts.

Nearly all of the call volume has centered at the November 3.50 strike, with more than 2,000 contracts exchanged. New positions are being initiated here, and it looks like there could be a mix of buying and selling activity occurring. Those buying to open the calls expect APRN to rally back above $3.50 by expiration at next Friday's close, while those writing the calls think the strike will now serve as a short-term ceiling for the shares.

More broadly, it's been puts that have been preferred in Blue Apron's relatively lightly traded options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 2,417 puts in the last two weeks, compared to 1,208 calls. Echoing this is the security's top-heavy Schaeffer's put/call open interest ratio (SOIR) of 1.21, which measures open interest levels among options expiring in three months or less.

While the January 2018 series accounts for most of this activity, the November 5 put is home to one of APRN's top open interest positions, with 3,217 contracts outstanding. Trade-Alert indicates a number of these puts were bought to open in recent weeks, as traders braced for more downside for the shares.

This trend is seen outside of the options pits, as well. Although APRN stock is short-sale restricted today, short interest surged 29.6% in the most recent reporting period to 14.82 million shares -- 49.3% of the equity's available float and the most on record.

The skepticism levied toward Blue Apron shares shouldn't be too surprising, given the stock's technical backdrop. Specifically, the equity is down 67% from its late-June initial public offering (IPO) of $10 -- and hit its highest price of $11 on June 29, its first day of trading. More recently, APRN stock gapped nearly 19% lower last Thursday on a negative earnings reaction.

 

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