Options Bulls Blast Bouncing Square Stock

Short-term speculators are buying to open SQ calls

Jan 4, 2019 at 1:56 PM
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Options trading is hot again on Square Inc (NYSE:SQ), with the shares surging 12.1% to trade at $59.01 on news the payment processor has picked a new chief financial officer (CFO). At last check, roughly 68,000 calls and 56,000 puts have changed hands on SQ stock -- two times what's typically seen at this point in the trading day, and volume pacing in the 99th annual percentile.

Most active is the January 2019 35-strike put, though it's not clear if these options are being opened or closed. Shorter-term traders are targeting calls, though, and it appears new positions are being purchased at the weekly 1/4 57.50 strike and weekly 1/11 60 strike. If this is the case, traders expect Square stock to extend today's rally through the calls' respective expirations of this Friday's close, and the close next Friday, Jan. 11.

More broadly speaking, the June 65 call has seen the biggest increase in open interest over the last 10 days, with more than 10,000 contracts initiated. The bulk of this activity occurred back on Dec. 27, when one trader apparently sold to close their March 80 calls and rolled them down and out to the June 65 strike.

This adjustment echoes yesterday's action from Mizuho, with the brokerage firm cutting its SQ price target, but remaining bullish toward the stock. This follows the stock's fourth-quarter sell-off, in which it plunged 43.4% -- its worst on record. Nevertheless, Square found round-number support near $50, and is now trading back above its 320-day moving average as Wall Street cheers the addition of Amrita Ahuja as Square's new CFO. The Activision Blizzard (ATVI) exec replaces Sarah Friar, who exited the position in November.

square stock daily chart jan 4


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