OPTIONS TRADING - PUTS & CALLS

[SpoochyMcGoo]

11 Highly Shorted Stocks Seeing Bullish Moves in the Put/Call Ratio

by: Kapitall April 15, 2011

When considering potential short squeeze candidates, it’s helpful to look beyond the short data to see how other market players are interpreting the stock.

With that in mind, we ran a screen on today’s most shorted stocks, with short float above 15%. Looking to the options market, we screened that universe for those with the most bullish moves in put/call ratio over the last ten trading days. The final list of 11 is below.

Given the opinion of the options market, do you think these names could be on the cusp of significant short covering? Read below, using this list as a starting-off point for your own analysis into short squeeze candidates.

1. Auxilium Pharmaceuticals Inc. (AUXL): Drug Related Products Industry. Market cap of $1.05B. Short float at 19.27%, equivalent to 14.71 days of avg. daily trading volume. Put/Call ratio has decreased 64.80% over the last ten trading days (from 1.96 to 0.69). AUXL has a relatively low correlation to the market (beta = 0.76), which may be appealing to risk-averse investors. The stock has lost 42.22% over the last year.

2. Quality Systems Inc. (QSII): Healthcare Information Services Industry. Market cap of $2.42B. Short float at 26.21%, equivalent to 28.07 days of avg. daily trading volume. Put/Call ratio has decreased 60.29% over the last ten trading days (from 1.36 to 0.54). The stock has gained 29.55% over the last year.

3. Zumiez, Inc. (ZUMZ): Apparel Stores Industry. Market cap of $900.57M. Short float at 18.29%, equivalent to 8.27 days of avg. daily trading volume. Put/Call ratio has decreased 37.78% over the last ten trading days (from 1.35 to 0.84). ZUMZ is exhibiting strong upside momentum--currently trading 11.3% above its SMA20, 10.72% above its SMA50, and 20.8% above its SMA200. The stock has had a couple of great days, gaining 5.67% over the last week.

4. Briggs & Stratton Corp. (BGG): Diversified Machinery Industry. Market cap of $1.13B. Short float at 15.84%, equivalent to 24.23 days of avg. daily trading volume. Put/Call ratio has decreased 35.94% over the last ten trading days (from 0.64 to 0.41). The stock has had a good month, gaining 13.2%.

5. Kindred Healthcare Inc. (KND): Medical Instruments & Supplies Industry. Market cap of $944.05M. Short float at 15.97%, equivalent to 7.37 days of avg. daily trading volume. Put/Call ratio has decreased 35.00% over the last ten trading days (from 0.4 to 0.26). The stock has gained 36.73% over the last year.

6. RealD Inc. (RLD): Movie Production, Theaters Industry. Market cap of $1.49B. Short float at 18.57%, equivalent to 10.54 days of avg. daily trading volume. Put/Call ratio has decreased 33.33% over the last ten trading days (from 0.36 to 0.24). RLD is exhibiting strong upside momentum--currently trading 9.01% above its SMA20, 15.22% above its SMA50, and 24.54% above its SMA200. The stock has had a good month, gaining 31.06%.

7. Cephalon Inc. (CEPH): Biotechnology Industry. Market cap of $5.75B. Short float at 19.89%, equivalent to 5.54 days of avg. daily trading volume. Put/Call ratio has decreased 29.66% over the last ten trading days (from 1.18 to 0.83). CEPH has a relatively low correlation to the market (beta = 0.42), which may be appealing to risk-averse investors. The stock is exhibiting strong upside momentum--currently trading 12.15% above its SMA20, 22.95% above its SMA50, and 22.89% above its SMA200. The stock has had a good month, gaining 36.49%.

8. EMC Corporation (EMC): Data Storage Devices Industry. Market cap of $55.06B. Short float at 30.17%, equivalent to 2.65 days of avg. daily trading volume. Put/Call ratio has decreased 21.84% over the last ten trading days (from 0.87 to 0.68). The stock has gained 37.93% over the last year.

9. Wintrust Financial Corporation (WTFC): Regional Bank. Market cap of $1.27B. Short float at 15.72%, equivalent to 16.25 days of avg. daily trading volume. Put/Call ratio has decreased 17.00% over the last ten trading days (from 1 to 0.83). The stock has lost 7.52% over the last year.

10. MBIA Inc. (MBI): Surety & Title Insurance Industry. Market cap of $1.84B. Short float at 17.11%, equivalent to 5.4 days of avg. daily trading volume. Put/Call ratio has decreased 15.48% over the last ten trading days (from 0.84 to 0.71). This is a risky stock that is significantly more volatile than the overall market (beta = 2.57). The stock is currently stuck in a downtrend, trading 9.51% below its SMA20, 14.24% below its SMA50, and 11.73% below its SMA200. It's been a rough couple of days for the stock, losing 6.86% over the last week.

11. Tesla Motors, Inc. (TSLA): Auto Manufacturer. Market cap of $2.38B. Short float at 23.97%, equivalent to 7.52 days of avg. daily trading volume. Put/Call ratio has decreased 11.11% over the last ten trading days (from 0.63 to 0.56). It's been a rough couple of days for the stock, losing 5.89% over the last week.