Bears Circle "Worthless" Stock After Citron Tweet

Citron is accusing Jumia of fraud

May 9, 2019 at 2:39 PM
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The shares of African e-commerce issue Jumia Technologies (NYSE:JMIA) are getting destroyed this afternoon, after short seller Citron Research weighed in on the shares. Specifically, Citron said, "In 18 years of publishing, [we have] never seen such an obvious fraud as Jumia," claiming the company inflated numbers and removed key metrics from its F-1 filing ahead of its U.S. debut. Further, Citron called JMIA stock "worthless." Against this backdrop, Jumia put options are flying off the shelves today.

Jumia priced its initial public offering (IPO) at $14.50 in April, the mid-point of its expected range. The stock debuted in the U.S. on April 12, opening at $18.95, and peaking at $49.77 five days later. However, shares of "the Amazon of Africa" are now pacing for a sixth straight day in the red, and their steepest one-day loss ever, last seen down 15.1% at $28.10.

JMIA stock chart may 9

As a result, option bears are circling Jumia shares. Roughly 5,700 puts have changed hands so far today -- six times the equity's average intraday put volume. Meanwhile, almost 4,000 JMIA calls have crossed the tape -- four times the norm. Options volume on both sides has already touched a record daily high.

The four most popular options today are puts expiring on Friday, May 17. Specifically, it looks like bears may be buying to open May 25, 30, 35, and 40 puts. Traders purchasing the puts expect JMIA to slide -- or continue to slide -- beneath the strikes by options expiration.

However, today's appetite for puts over calls merely echoes the trend seen on the major exchanges since JMIA options became available. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open more than two puts for every call during teh past two weeks.
 

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