Retail traders have put the struggling insurance stock in the spotlight
The shares of insurance name Root Inc (NASDAQ:ROOT) are up 2.1% at $6.54 this afternoon. The security is currently a top name on popular speculative trading forum Stocktwits, as well as Swaggystocks, a tracking website that monitors sentiment of Reddit's WallStreetBets forum.
The stock surged earlier in the day, hitting a one-month high of $8.40. It looks like some of this price action was capped by the 80-day moving average, which put pressure on ROOT back in late June. The shares are still eyeing their third daily win, though Root stock is underperforming longer term, down 58.2% for the year.
Short sellers have had a tight hold on ROOT. The 15.85 million shares sold short make up a hefty 33.3% of the stock's available float, and would over three days to cover at its average daily pace of trading.
Analysts are cautious, too. Of the 10 covering ROOT, eight consider it a "hold" or worse, compared to only two "strong buy" ratings. Meanwhile, the 12-month consensus price target of $7.31 is an 11.8% premium to current levels.
Options volume on ROOT has exploded today, with 183,000 calls and 13,000 puts across the tape so far -- 18 times the intraday average, with volume running in the top percentile of its 12-month range. The most popular is the September 10 call, followed by the 7.50 call in the same monthly series. Positions are being bought to open at both, suggesting investors are eyeing more upside for ROOT in the coming month.