Put Buying Hits Extreme Levels on eBay Stock
Put buying has easily surpassed call buying in recent weeks
eBay Inc (NASDAQ:EBAY) is trading up 1% today at $39.20, even though Deutsche Bank this morning downgraded its rating on the e-commerce name to "hold' from "buy," while trimming its price target to $42 from $46. The brokerage note said eBay needs to differentiate its business if it wants to be able to challenge competitors like Amazon.com (AMZN), Walmart (WMT), and Target (TGT).
EBAY shares have had a nice year, adding 38.2% year-to-date, and recently finding strong support from the 200-day moving average. This leaves them in striking distance of the July annual high of $42.
However, options traders are positioned for a pullback, according to data from the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The security's 10-day put/call volume ratio of 5.28 across the exchanges ranks in the 100th annual percentile, showing a much stronger-than-normal preference for put buying lately.
Interestingly, peak open interest on EBAY is at the January 2020 40-strike call, where almost 25,500 contracts reside; the next closest contract has fewer than 8000. For a more near-term perspective, speculators trading the November series have focused on the $40 level, with high open interest at both the 40-strike call and put.