Why Call Traders, Analysts Are Targeting Upstart Stock

Call volume is running at 10 times the intraday average amount

Deputy Editor
May 10, 2023 at 12:13 PM
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Call traders are taking an interest in Upstart Holdings Inc (NASDAQ:UPST), following the company's first-quarter earnings report. Upstart yesterday reported losses of 47 cents per share, which was narrower than analysts' expected losses of 81 cents per share, alongside a revenue miss. 

So far, 119,000 calls have crossed the tape, which is 10 times the intraday average amount. Meanwhile, the 71,000 puts traded so far is six times the put volume typically seen at this point in the day. The top 11 most active contracts are seeing new positions opening up, with the weekly 5/12 20-strike call seeing the most activity.

Analysts are also weighing in, with at least four analysts raising their price targets after the results. There's room for additional price-target hikes, too, as the 12-month target price of $12.04 is a 35% discount to UPST's current level. Meanwhile, just one of 15 covering brokerages considers Upstart stock a "strong buy," with the rest a "hold" or worse.

Short interest is also an area to keep an eye on, down 9.4% over the last month. The 25.88 million shares sold short still represent a hefty 37.4% of UPST's total available float.

Upstart stock was last seen 30.6% higher to trade at $18.39, or its highest level since early march. The equity just reclaimed support from its 140-day moving average, which has weighed on the shares for much of the last six months. Now pacing for its sixth-straight daily pop -- and its best single-day percentage gain since February -- UPST is 38% higher year-to-date.

UPST Chart May 102023 

Now may be the right opportunity to bet on the stock's next move with options. given UPST's Schaeffer's Volatility Scorecard (SVS) stands at 95 out of 100. In simpler terms, the equity has exceeded option traders' volatility expectations in the last year.


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