Disney Rumors Drive Call Trading on Workday

Traders are opening positions at near-term WDAY calls

Josh Selway
Nov 6, 2018 at 1:59 PM
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Workday Inc (NASDAQ:WDAY) is trading up 3.8% today at $135.25, thanks to rumors the software company landed a few major contracts during the third quarter, including one with Walt Disney (DIS). While nothing will be confirmed until Workday reports earnings -- tentatively scheduled for later this month -- options traders are seemingly betting on more upside in the near term.

Jumping right in, traders are opening new positions at the November 146 call, while others are opening positions at the weekly 11/9 138-strike call. Anyone buying these calls is expecting WDAY stock to keep rising in the coming days and weeks.

It should be noted that this interest in calls runs counter to the recent trend out of Workday options traders. For instance, the 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) comes in at 1.20, and ranks in the 88th annual percentile. Taking a broader view, put open interest currently stands as an annual high.

Pessimism is high elsewhere, as well. That is, 7.4% of WDAY's float is dedicated to short interest, and going by average daily trading volumes, it'd take these bears almost six sessions to cover their positions.

Meanwhile, sentiment is mixed among analysts. There are 32 brokerage firms tacking the security and 16 of them have "strong buy" or "buy" ratings, compared to 17 "holds" or "strong sells." This split is surprising given the shares' success on the charts, adding 33% this year and hitting an all-time high of $157.12 on Sept. 4.


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