Looking at the Put/Call Ratio and Open Interest Together
02/24/2010 12:01 am EST
There is an interesting battle going on around MercadoLibre, Inc. (MELI). The stock gapped lower at the open yesterday, but then rebounded from the initial lows. A look to the sentiment profile shows a couple of interesting points.
The most interesting point is that only three of eight analysts (38%) rank the stock with a buy rating. That seems like relatively low optimism when you consider the daily chart below. Even after the recent pullback, the stock was up more than 200% over last 52 weeks.
At one point, MercadoLibre was a heavily shorted stock, but short interest has been generally decreasing since last summer. As discussed a number of times, I am interested in these situations where short sellers relent, but analysts have yet to jump aboard.
The Schaeffer's Put/Call Open Interest Ratio would seem to suggest optimism, but the open interest configuration shows that open interest is fairly light. In other words, I wouldn't be too concerned about that.
By Nick Perry of Schaeffer’s Trading Floor Blog