Many option bulls expect today's price action to hold
Clover Health Investments Corp (NASDAQ:CLOV) is enjoying a boost today, up 23.5% at $11.11 this afternoon, with many Reddit-based traders now targeting a fresh round of stocks with high volumes of short interest. The security is still trading well below its Jan. 4 record high of $17.45, and sports a 33% year-to-date deficit, though it's eyeing a close above its 200-day moving average for the first time since its formation in April.
The surge has sparked a melee of activity in the options pits, with 340,000 calls and 29,000 puts exchanged so far -- eight times the intraday average. The most popular is the June 11 call, followed by the 10 call in the same monthly series, with positions being opened at the former. This suggests these traders expect CLOV to maintain some of today's price action up until these contracts expire on Friday, June 18.
Calls have been quite popular lately. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CLOV sports a 10-day call/put volume ratio of 14.06, and its Schaeffer's put/call open interest ratio (SOIR) stands at 0.21.
This sentiment isn't reflected elsewhere, though. As we mentioned earlier, CLOV is heavily shorted at the moment, with short interest rising 7.7% in the last reporting period. The 40.46 million shares sold short make up a whopping 36.1% of the stock's available float.
Analyst sentiment, meanwhile, is lukewarm. Just one of the three covering CLOV call it a "strong buy," while two say "hold." Plus, the 12-month consensus price target of $9.67 is a 13.4% discount to current levels.