Option Traders on One Side of LNKD

08/29/2011 10:36 am EST


Elizabeth Harrow

Director of Digital Content, Schaeffer's Investment Research, Inc.

With shares heading lower, short interest on LinkedIn Corporation (LNKD) has spiked again recently, and short option players now outnumber longs by a near three-to-one margin.

Puts have become quite popular on LinkedIn Corporation (LNKD), according to data from the major options exchanges. During the past ten days, in fact, options players on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and Nasdaq OMX PHLX (PHLX) have bought to open 1.44 puts for every call on the social networking stock.

Last Thursday alone, speculators on the ISE, CBOE, and PHLX bought to open 860 puts on LNKD, along with just 298 calls, netting the shares a single-day put/call volume ratio of 2.89 with bearish bets nearly tripling their bullish counterparts.

LNKD’s Schaeffer’s put/call open interest ratio (SOIR) confirms this pessimistic bias, with the current reading of 1.19 revealing that puts outnumber calls among options slated to expire within three months.

Elsewhere on Wall Street, stock traders are similarly downbeat. Short interest on LNKD fell by more than 20% over the most recent reporting period, yet these bearish bets still account for a lofty 40% of the equity’s float.

Checking out the charts, LNKD has turned south in recent weeks, right along with the rest of the equities market. The stock is currently lingering beneath its ten- and 20-day moving averages, but the round-number $70 level has emerged as a potential layer of support.

Click to Enlarge

Below that $70 support level, a previous low of $60 may offer additional support.

By Elizabeth Harrow, contributor, Schaeffer’s Trading Floor Blog

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