Pure Storage Puts Hot as Stock Heads Toward Worst Day Ever

Puts are trading at more than 41 times the expected intraday rate

Pure Storage Inc (NYSE:PSTG) stock is down 21% at $16.28 -- sinking back toward its late-December lows, and pacing toward its worst day ever. Last night, the data storage name reported a wider-than-anticipated adjusted first-quarter loss of 11 cents per share on $326.7 million in revenue, less than analysts were expecting. PSTG also gave weak revenue guidance for the current quarter and full year.

Analysts have been quick to chime in, with at least six brokerages cutting their PSTG price targets, including Credit Suisse and Susquehanna to $18. Lake Street Capital, meanwhile, dropped its target price to $22, but maintained its "buy" rating, calling Pure Storage a "good growth story," and saying "savvy growth investors should be buying shares."

Overall, most analysts are bullish on PSTG stock, with 10 of 14 in coverage maintaining a "strong buy" rating, and not a single "sell" on the books. Plus, the average 12-month price target of $22.68 is a nearly 40% premium to current trading levels.

Elsewhere on Wall Street, the tech stock has been a popular target of short sellers. Short interest rose 5.2% in the most recent reporting period to 16.69 million shares. This represents a healthy 8.1% of the equity's available float, or 6.7 times the average daily trading volume.

Amid today's bear gap, PSTG stock is on the short-sale restricted list, which may be sparking accelerated put trading on the equity this morning. At last check, 1,164 put options were on the the tape -- 41 times what's typically seen at this point. Most active is the June 15 put, where most of the contracts have crossed at the bid price.