Options Bulls Think SPCE Is Ready For Liftoff

The equity is eyeing its highest close in two months

Assistant Editor
Jul 9, 2020 at 2:33 PM
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The shares of Virgin Galactic Holdings Inc (NYSE:SPCE) are soaring today, which is fantastic news for those invested in the aerospace company. Though the reason for this surge is unclear, options traders, specifically bulls, are latching on to the stock today. Before we dive into today's unusual call volume, SPCE was last seen up 12% at $18.81, eyeing its highest close in nearly two months. Additionally, the equity is looking to close above the 100-day moving average for the first time in about the same span of time. SPCE blasted past the recently resistant $18 level, and now boasts a 74.1% year-over-year gain.  

SPCE Chart July 9

As we mentioned earlier, today's rise has options bulls piling on the equity. So far, 295,000 calls have crossed the tape -- five times the intraday average, with volume pacing in the 99th percentile of its annual range. This is compared to the over 49,000 puts exchanged in the same time period. The most popular is the July 20 call, followed by the weekly 7/10 20-strike call, with positions being opened at both. This suggests these traders are speculating on a lot more upside for SPCE by the time these contracts expire. This comes as no surprise, however, considering that in the last 10 days, 85,582 calls exchanged hands, compared to 19,729 puts.

Though analysts covering the equity are few, they're still quite bullish on Virgin Galactic stock. Both of the brokerages covering the security rate it a "buy" or better. Meanwhile, the consensus 12-month price target of $25 is a 32.9% premium to current levels. 

Rounding things out, and worth noting amid all the optimism, short sellers are building their positions. In the last two reporting periods, short interest rose 19.9%, with the 29.98 million shares sold short representing a staggering 56% of the stock's available float. This could work in bulls favor, should some of these pessimistic positions begin to unwind. 

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