PINS Could Continue to Post Big Gains in 2021

Premiums are reasonably priced at the moment, too

Apr 7, 2021 at 2:18 PM
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The shares of social media name Pinterest Inc (NYSE:PINS) have reclaimed the $76 mark, which had been an area of resistance for the past several weeks, and is four times above its initial public offering (IPO) price. Plus, thanks to a solid 13% gain the last seven days,  the security has distanced itself from its year-to-date breakeven level, making now good time to speculate on PINS’ next move with call options.
Though analysts are mostly bullish towards Pinterest stock, there is still some room for upgrades, which could push shares higher. Of the 19 in question, six still carry a tepid “hold” rating.

Short sellers keep piling on, though. Short interest has increased 61% year-to-date, and is now only 20% below record peak since the stock’s IPO. In fact, short interest added 7.3% in the most recent reporting period, and the 21.91 million shares sold short now account for a whopping 25.4% of the stock’s available float. With the exception of those that acquired positions in February, these shorts are now underwater.
Additional tailwinds could come in the form of shifting sentiment in options pits. This is per Pinterest stock’s 50-day put/call volume ratio of at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 99th percentile of its annual range. In other words, long puts are being picked up at a faster-than-usual clip.
PINS options can be had for a bargain right now, too. The security's Schaeffer's Volatility Index (SVI) of 52% stands at the very bottom percentile of the past 12 months, or the lowest level since May 2020. In other words, the stock is sporting attractively priced premiums at the moment. Finally, our call recommendation has a leverage ratio of 4 and will double in a 23.7% pop in the underlying equity.
Subscribers to Schaeffer's Weekend Trader options recommendation service received this PINS commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading serv

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