Bulls Cheer Holiday Sales for Zumiez

Call buying has been hot on ZUMZ

Zumiez Inc. (NASDAQ:ZUMZ) is one winner today on Wall Street, up 3.3% at $34.14, thanks to the company's holiday sales update. The strong numbers prompted the retailer to increase its guidance for the quarter, likely increasing the chances it announces another earnings win when it reports in March. Specifically, ZUMZ shares have gained more than 11% after each of the last three earnings releases.

Today's price action is likely good news for recent options traders, since data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 7.23. This reading ranks in the 85th annual percentile, revealing a larger-than-normal interest in long calls over puts. During this time, the January 2020 35-strike call saw the largest increase in open interest. Sure enough, this contract is seeing activity already this morning, potentially from traders closing positions.

However, short interest has been on the rise, increasing 14% in the last reporting period. This puts 10.4% of the total float in short sellers' hands, which would take roughly a week to cover, based on average daily trading volumes. This could also suggest Zumiez shares could keep running higher, should some of these bears begin to cover.

Looking back, ZUMZ has been strong for some time, sporting a one-year rise of almost 54%. The equity hit a four-year high of $35.68 back on Dec. 6, and peaked just below here earlier at $35.12. Bullish analyst notes could also be possible going forward, since half in coverage have just "hold" ratings in place, and just this morning Wedbush boosted its price target to $28 from $25.