New High From Crocs Stock Met with Accelerated Options Trading

Recent options activity has been bearish on Crocs

Jan 9, 2019 at 1:46 PM
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Footwear stock Crocs, Inc. (NASDAQ:CROX) is rallying to new highs, with some citing a positive call-out from data firm M Science, though we've been unable to pin down the specifics. Regardless, the shares were last seen up 5.3% at $31.71, and just tapped a seven-year high of $31.88. This would mark a fourth straight gain for the equity, bringing its one-year rise to more than 135%, with a recent pullback neatly contained by the 50-day moving average. Meanwhile, there's been notable options activity on CROX, even before today.

crox stock price

Looking back, the security actually has a 10-day put/call volume ratio of 4.86 across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), a reading that ranks in the 91st annual percentile. Said in simpler terms, there's been extremely high demand for long put options in recent weeks, a trend that could reverse and actually work in Crocs' favor.

Taking a peek at today's options trading, put volume has nearly doubled call volume, while almost 4,000 options contracts have crossed -- compared to an average daily volume of just 1,308. Most popular is the January 2019 31-strike put, where new positions are being opened, while the January 2020 25-strike put is also seeing new positions opened. On the call side, the February 31 and 33 strikes are most popular.

Bullish traders should certainly monitor Crocs going forward because it remains a candidate for a short squeeze. Many short sellers have already been covering on CROX, illustrated by a 35.3% decline in short interest in the last reporting period. However, almost 10% of the float is still held by these bears, so there's plenty of potential for this short covering trend to continue.

 

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