Listen to OIC's Wide World of Option 54: The Rebranding of OCC and Stock Repair On Profiles & Pe...
Put Players Run to Popular Shoe Maker
03/05/2012 11:35 am EST
A recent spike in put selling on Crocs, Inc. (CROX) signals that traders believe the shares will finish at or above the current price level at March expiration.
Put players took a liking to Crocs, Inc. (CROX) last week, as more than 3,600 of these options have changed hands by mid-day on Friday alone, reflecting five times the equity’s average daily volume.
Most popular has been the near-the-money March 20 strike, where 2,671 puts have been traded— over half of them at the bid price, pointing to seller-fueled volume.
This option is currently home to open interest of just 984 contracts, so it can be assumed that new positions are being initiated here. By selling these puts to open, traders are wagering that the stock will remain north of the $20 mark through front-month expiration.
This upswing in put volume runs counter to CROX’s current trend. The Schaeffer’s put/call open interest ratio (SOIR) sits at 0.52, indicating that calls nearly double puts among options scheduled to expire within three months. This ratio registers in the 32nd percentile of its annual range, which means that short-term options players have been more call-heavy toward the stock just 32% of the time over the last 12 months.
The majority of analysts following the footwear behemoth seem to share this upbeat sentiment toward CROX. According to Zacks, the equity boasts four "strong buy" endorsements, compared to just two "holds" and not a single "sell."
From a technical perspective, CROX has gained more than 36% year-to-date, and has outpaced the broader S&P 500 Index (SPX) by roughly 19% during the past 40 sessions. On the charts, however, the stock remains pinned beneath its ten-month moving average, which has acted as resistance since October.
By Terri Stridsberg, contributor, Schaeffer’s Research
Related Articles on OPTIONS
This rebroadcast of OIC's webinar panel program discusses how options professionals use technical an...
Are you curious about what Gamma Scalping is and how you can use it as a part of your investment str...
This rebroadcast of OIC's webinar panel discussion covers why implied volatility levels drive option...