Puts Popular as EZPW Hits New Low

EZPW put options have been very popular, especially among near-term traders

Oct 8, 2019 at 1:50 PM
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One name on our radar today is pawn shop operator EZCORP Inc (NASDAQ:EZPW), as a bearish analyst note has the stock trading at new lows. Jefferies cut its rating on the shares to "hold" from "buy," and slashed its price target from $13.50 all the way down to $6.50, expressing concerns over the company's new Executive Chairman Phillip Cohen. EZPW has given back 13.1% as a result to trade at a new three-year low of $5.37, and options traders are moving in.

Roughly, 2,600 put options have traded today, compared to a daily average of 1,525, with intraday call volume sitting at just 42. Most active is the March 5 put, which was second-most popular on the top open interest positions list before today. Meanwhile, new positions are opening at the October 2.50 and 5 puts.

Looking back, the little options trading that has taken place on EZCORP has mostly been put buying. Data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows 7.65 long puts have crossed for every call during the past 10 days. In fact, EZPW's Schaeffer's put/call open interest ratio (SOIR) is an extremely put-skewed 8.63, which sits near an annual high. You can see the spike in this reading in blue on the chart below.

ezpw stock oct 8

But speculating on EZPW with short-term options is expensive right now, with the 30-day at-the-money implied volatility of 65.8% ranking in the 93rd annual percentile, showing elevated volatility expectations at the moment. In other words, pricey options premium could fade the benefit of leverage for options buyers.

 

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