Red-Hot Adobe Stock Sees Surge in Bullish Betting

ADBE's December 320 call is in high demand today

by Karee Venema

Published on Dec 13, 2019 at 3:14 PM

Options volume is running quick on Adobe Inc (NYSE:ADBE) stock today, as the shares surge in the wake of the Photoshop maker's earnings report. In its fiscal fourth quarter, ADBE recorded an adjusted profit of $2.29 per share on $2.99 billion in revenue -- more than analysts were expecting. This is offsetting a lower-than-anticipated current-quarter revenue forecast, and has Adobe shares up 4.6% to trade at $319.98, fresh off a record high of $321.73.

Meanwhile, in the options pits, more than 80,000 contracts have changed hands -- five times what's typically seen at this point, and volume pacing in the 98th annual percentile. Day traders are buying to open new positions at the weekly 12/13 320-strike call, targeting bigger gains through expiration at tonight's close.

Elsewhere, slightly longer-term traders appear to be purchasing new positions at the December 320 call for a volume-weighted average price of $3.71. If this is the case, breakeven for the call buyers at the close next Friday, Dec. 20, when front-month options expire, is $323.71 (strike plus premium paid).

Today's heavy call buying marks a change of pace for ADBE options traders. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.18 ranks in the 92nd annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

Given Adobe's strength on the charts, though, it's possible some of this recent put buying came at the hands of shareholders hedging against any post-earnings downside risk. Heading into today's trading, ADBE stock was up nearly 18% since taking a sharp bounce off its 320-day moving average in late October. Plus, today's gap helped the shares slice through the $310 region, which had previously marked tops for the equity.

adbe stock daily price chart on dec 13


A Schaeffer's exclusive

11 Stocks to Buy Before Leap Day

Access your FREE insider report before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.
Coronavirus Drags Wall Street Into The Red
The coronavirus outbreak is starting to impact company's earnings reports
Fitbit Stock Shocks Wall Street
FIT has surged 111% over the past six months
Why One Investor Is Betting $523,111 on This 1 Stock
This small, California-based company is pioneering breakthrough technology that is enabling companies to move vast quantities of data over the Internet at lightning speeds.