Call Volume Peaks on Voya Financial Stock After Business Sale

More upside could be in store, too, if short sellers begin to cover

Dec 21, 2017 at 1:57 PM
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Financial stock Voya Financial Inc (NYSE:VOYA) is rallying to record highs today, and options volume is surging as a result. Call volume has hit the highest point in at least a year, with roughly 11,500 contracts traded -- blowing past the former 52-week high of 4,248 from April. In fact, call open interest on VOYA stood at just 8,994 before today.

The most popular option by far is the May 55 call, and data suggests options traders are buying to open positions here. If that's the case, these bulls are expecting even more upside from the shares in the months ahead. Meanwhile, new positions are being added at the January 2018 50-strike call, as well.

This all comes after the company announced it's selling two businesses to a consortium of investors in a deal it values at roughly $1.1 billion. It also announced a $1 billion stock buyback program. Voya Financial stock is near the top of the New York Stock Exchange today, trading 10.6% higher at $51.78, and earlier touching a record high of $51.89. Year-to-date it's added 31.1%.

From a contrarian perspective, this rally could have legs. That's because five of 13 covering brokerage firms still have "hold" or "strong sell" ratings in place, and VOYA's short-interest ratio is elevated, coming in at 7.4. In other words, the stock could enjoy could enjoy tailwinds if this pessimism unwinds in the form of upgrades and/or short covering.

 

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