Call Volume Spikes on UPS Partnership

STMP analysts and options traders are eyeing the $100 level

Oct 22, 2019 at 10:46 AM
facebook X logo linkedin Inc. (NASDAQ:STMP) stock is near the top of the Nasdaq today, on news the online shipping concern is teaming up with delivery giant United Parcel Service (UPS). The partnership will offer customers up to 55% off daily UPS shipping rates, as UPS attempts to woo small business customers. At last check, STMP shares are up 18.3% at $90.04, and both analysts and options traders are reacting to the news.

STMP stock is now on pace to close its huge May bear gap, the result of the company slashing its full-year revenue guidance. The stock is also pacing to close north of its 200-day moving average for the first time in roughly a year, and has now almost tripled since its multi-year low of $32.53, tagged in late May. However, the equity could run into a potential speed bump in the round-number $100 region, which contained rebound attempts following a massive bear gap in February, sparked by the firm's U.S. Postal Service (USPS) break-up.

STMP stock chart 1022

Speaking of the century mark, Craig-Hallum hiked its price target on STMP shares to $100 from $60. Additional price-target hikes could be forthcoming, if today's gains hold. Currently, the security's consensus 12-month price target of $80.80 represents a discount to STMP's price. In addition, just one of five analysts considers the stock worthy of a "buy" or better rating, suggesting analyst upgrades could be a possibility. options are also flying off the shelves today, particularly on the call side. The equity has seen nearly 2,900 calls change hands in the first 90 minutes of trading -- 35 times the average intraday pace. For more context, STMP averages daily call volume of just 505 contracts. Meanwhile, nearly 900 puts have traded -- 10 times the norm, and already surpassing STMP's average daily put volume of fewer than 550 contracts.

Once again, the round-number $100 mark is in focus. Specifically, the weekly 10/25 100-strike call is most active, followed by the weekly 10/25 95-strike call, with new positions being opened at both strikes. Buyers of the calls expect STMP shares to topple the $100 and $95 levels, respectively, before the close this Friday, Oct. 25, when the options expire.

Today's appetite for calls is certainly a shift in sentiment among STMP option buyers. On the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio sits at a lofty 4.47 -- in the 97th percentile of its annual range. In other words, prior to today, STMP speculators were picking up long puts over calls at much faster-than-usual clip.


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