BABA Deal Pushes Traders to VNET Call Options

Beware of VNET's 320-day moving average, though

Oct 14, 2019 at 1:33 PM
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One stock making a notable spike today is Chinese data services provider 21Vianet Group Inc (NASDAQ:VNET). The company inked an agreement with Alibaba (BABA) to deploy data center services, and the shares of VNET were last seen up 15% at $8.30. In response, there's unusual options trading on 21Vianet, and calls in particular are popular.

Roughly 850 calls have crossed today, a small amount on an absolute basis, but large compared to the daily average of just 196. New positions are opening at the December 9 call, while the October 9 call has also seen a high number of contracts traded.

Coming into today, short-term traders were already heavily call-skewed, with the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.40 showing calls more than double puts among contracts expiring within three months. Peak open interest, meanwhile, rests at the December 7 call.

While VNET's price action has been impressive today, the chart actually still looks somewhat ominous. That's because the shares earlier topped out right near the 320-day moving average, a trendline that swiftly blocked last month's breakout attempt. The equity is down 3.8% year-to-date, but an extended breakout could draw more attention from Wall Street, since just two brokerage firms are in coverage right now. 

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