Shopify Put Options Pop as Citron Circles Back

SHOP shares are lower after the short seller's latest tweet

May 21, 2018 at 2:46 PM
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Short seller Citron Research initially took aim Shopify Inc (NYSE:SHOP) back in late March, saying the shares should be trading at $100 and predicting Facebook-related headwinds. Today, Citron circled back with another tweet, claiming a Wall Street Journal article on merchandise flipping "validates our research" on Shopify. Against this backdrop, SHOP shares are lower, and option bears are jumping in.

 

 

At last check, Shopify stock was down 1.6% to trade at $144.75. From a longer-term perspective, the security took a hit after the aforementioned Citron tweet back in March, but eventually found support atop its 160-day moving average. The shares have since erased those Citron-related losses, and earlier today peaked at $150.97 -- territory not charted in two months.

SHOP stock chart may 21

So far today, nearly 5,100 SHOP puts have changed hands -- about 1.7 times the average intraday volume. The most active put is the June 140 strike, where it appears some traders may be purchasing the contracts to open. If so, they're either betting on or hedging against a drop south of $140 for Shopify shares over the next month.

Outside of the options pits, Citron certainly isn't the only short seller swarming SHOP. Short interest skyrocketed nearly 86% during the past two reporting periods, and now represents more than 14% of the stock's total available float. Should the equity resume its recent uptrend, it would take more than a week for these speculators to buy back their bearish bets, at the equity's average pace of trading.


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