LOCO Put Traders Rush In During Pullback

El Pollo LoCo still sports a strong year-over-year lead

by Josh Selway

Published on Feb 13, 2019 at 2:26 PM
Updated on Jun 24, 2020 at 10:16 AM

It seems a Seeking Alpha article deeming El Pollo LoCo Holdings, Inc. (NASDAQ:LOCO) "uninvestible" is sinking the stock today. LOCO shares were last seen down 3.7% at $14.74, and put volume has exploded, with nearly 6,000 contracts crossing so far, compared to a daily average of just 162. Signs point to buy-to-open activity at the February 15 and March 13 puts, the two most popular options today. These bears would be betting on more downside for the restaurant concern in the coming weeks.

Near-term options traders were already put-heavy on LOCO, according to the equity's Schaeffer's put/call open interest ratio (SOIR) of 1.48, which ranks in the 68th annual percentile. This is due to heavy accumulation at the March 15 put, where 3,642 contracts reside, compared to just 964 at the next closest contract.

Meanwhile, short interest keeps climbing on El Pollo LoCo, jumping 55.3% in the last two reporting periods. This puts 11% of the stock's total float in the hands of short sellers, or almost four times the average daily trading volumes.

Today's pullback has the stock hovering near a trendline connecting higher lows over the past year, and accelerates the losses that have occurred since the shares' Jan. 23 multi-year peak of $18.47. All the same, LOCO sports a one-year lead of roughly 58%.

loco stock chart


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