Square Bulls Emerge After Analyst Upgrade

SQ call volume is running at four times the usual rate

Jul 9, 2019 at 1:37 PM
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Square Inc (NYSE:SQ) shares are in rally mode today, thanks to some upbeat analyst attention. Raymond James upgraded SQ stock to "market perform" from "underperform," saying "the negative catalysts have mostly played out." As such, Square shares were last seen 6.4% higher at $78.11, and option bulls are betting on more upside.

SQ stock is pacing for its best day since Jan. 24, and its highest close since mid-March. The equity has rallied roughly 30% since skimming the $60 level in early June, but is now staring at a familiar ceiling in the $79-$81 neighborhood. This region has contained most breakout attempts since October 2018.

SQ stock chart july 9

Nevertheless, Square has seen about 92,000 call options trade already today -- four times its average intraday volume. While intraday put volume is running at three times the norm, the 36,000 SQ puts exchanged are still dwarfed by what we've seen on the call side.

Most active is the weekly 7/12 77-strike call, where nearly 6,200 contracts have traded. Those buying the calls to open expect Square stock to extend its rally north of the $77 level through Friday, when the options expire. Taking runner-up today is the weekly 8/2 70-strike call, buyers of which expect SQ to continue its journey north of $70 through the close on Friday, Aug. 2.

Elsewhere, more upbeat analyst attention could be on the horizon for the shares, especially if they take out aforementioned resistance. Currently, 15 of the 28 analysts following the stock maintain tepid "hold" or "strong sell" opinions. What's more, the consensus 12-month price target of $82.10 represents a slim premium of about 5.5% to current levels, suggesting price-target hikes could also ensue.

Meanwhile, despite the stock's impressive rally over the past few weeks, short interest grew 11.2% during the past two reporting periods. These bearish bets now account for about 9.3% of SQ's total available float. Should the stock extend its uptrend, a short squeeze could add fuel to the equity's fire.

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