Are ZAGG Short Sellers Safeguarding their Bearish Bets with Calls? Schaeffers Investment Research "Market Commentary"
Tuesday, December 28 2010 11:05 AM, EST
Northland Securities today lifted its price target on protective-covering manufacturer ZAGG Inc. ( ZAGG ) to $11 from $10 , according to Briefing.com. The new target is more in line with the stock's consensus 12-month price target of $11.50 , as calculated by Thomson Reuters , which represents a relatively steep premium of 56% to ZAGG's closing price of $7.37 on Monday.
In the same vein, it appears the options arena may be growing more optimistic toward ZAGG , too. The stock currently boasts a 10-day call/put volume ratio of 3.59 on the International Securities Exchange (ISE), implying that speculators have bought to open almost four ZAGG calls for every put during the past couple of weeks. What's more, this ratio registers in the 70th annual percentile, suggesting that options players on the ISE have rarely initiated bullish bets over bearish at a faster pace during the past 52 weeks.
However, the recent affinity for long calls could be related to hedging activity by the shorts. Short interest on the equity advanced by 57.6% during the past month, and now accounts for 21.8% of the stock's total available float. In fact, at the security's average pace of trading, it would take roughly a week to repurchase all of these pessimistic positions. In any event, this simultaneous influx in short interest and call buying could indicate that short sellers are protecting their bearish bets with bullishly biased options on ZAGG .
At last check, the shares of ZAGG have added 1.9% to flirt with the $7.50 level. Nevertheless, the stock's upward momentum has run into a speed bump in the form of ZAGG's 10-day moving average, hovering just overhead in the $7.80 neighborhood.
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4kids
all jmo
10/5/07 -- there are no coincidences here ...
oh and like many other longs .. not selling at this level --
