NetSuite Inc. (N) isn't terribly popular with option players, but speculative activity ballooned to roughly five times the usual level last Friday. So far, just over 200 calls and 1,620 puts have crossed the tape, revealing a potentially pessimistic bias to the day's option volume.
Taking a closer look at the data, the April 15 put is far and away the day's most active strike, with 888 contracts changing hands. The majority of these puts have traded near the ask price, suggesting they were purchased. Currently, this in-the-money strike is home to peak put open interest for the April series, boasting 2,941 contracts in residence.
However, today's bearishly biased option activity is nothing new for N. The stock's ten-day International Securities Exchange (ISE) put/call volume ratio of 23.93 reveals that nearly 24 times more puts than calls were purchased on this exchange during the past two weeks. This ratio ranks in the 90th annual percentile, just ten percentage points from a pessimistic peak.
Likewise, N's Schaeffer's put/call open interest ratio (SOIR) of 4.02 ranks higher than 90% of other such readings taken during the previous year, as short-term speculators have been more skeptically aligned only 10% of the time. Plus, short interest rose by 3.5% during the past month to account for 21.2% of the equity's float.
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Unfortunately, this heavy-handed negativity hasn't sheltered N from a post-earnings plunge. The stock is down 17% at last check, with traders panning the company's disappointing first quarter revenue outlook. The shares are now on pace to notch a weekly finish beneath support at the 32-week moving average for the first time since March 2009.
By Elizabeth Harrow of Schaeffer’s Trading Floor Blog
