Short-Term Call Buyers Should Target Match Group Stock

Short covering and upgrades could spark buying power for MTCH stock

Oct 16, 2018 at 2:57 PM
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Online dating name Match Group Inc (NASDAQ:MTCH) has put in a strong performance this year, up almost 72%. More recently, the stock pulled back during last week's broad-market sell-off, but found support near $50, which is home to its April highs. The shares quickly recovered -- gaining 1.9% on Thursday, when the Nasdaq Composite dropped 1.3% -- suggesting it could be a good time to join MTCH on its next move higher.

181012wkaltMTCH

 

A continued round of short covering could keep the wind at MTCH's back. Since hitting a record high in early April, short interest is down 16.7% -- a period in which the stock has gained 20%. Still, the 24.28 million shares currently sold short represents a whopping 49% of MTCH's total available float, and nearly 12 days of pent-up buying power, at its average daily trading volume.

Analysts have yet to catch up to this impressive price action, too. Of the 13 brokerages covering MTCH, six rate it a tepid "hold," leaving the door open for upgrades to draw more buyers to the table.

As far as options are concerned, the stock's Schaeffer's Volatility Index (SVI) of 67% sits in just the 35th annual percentile, revealing low volatility expectations are being priced into near-term contracts -- a boon to potential premium buyers. Plus, the stock has consistently rewarded premium buyers over the past year, per its Schaeffer's Volatility Scorecard (SVS) reading of 94 out of a possible 100. This shows the equity has tended to make larger-than-expected moves on the chart, compared to what the options market has priced in.

Subscribers to Schaeffer's Weekend Trader options recommendation service received this MTCH commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

 

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