The shares of prepaid debit card provider Paysign Inc (NASDAQ:PAYS) have soared more than 200% in 2019, and hit an all-time high of $13.63 last week. But today the stock's down 11.3% at $11.27, after brokerage firm BTIG downgraded its rating to "neutral" from "buy." The analyst note suggested that Paysign's strong growth is already priced into the stock price, though a pullback in the shares (maybe like the one today?) could be a buying opportunity. Against this backdrop, PAYS options volume has picked up.
At last check, more than 800 puts had crossed the tape, compared to a daily average of just 228. The June 12.50 put is most popular, while new positions are opening at the July 12.50 put. Call volume is also accelerated, with more than 1,100 contracts traded so far -- two times the average intraday pace -- and buy-to-open activity seemingly taking place at the July 15 call.
Open interest on Paysign already stands at an annual high, with about 3,700 puts and 6,300 calls outstanding. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), those who have placed bets have preferred long puts over long calls by a nearly 3-to-1 clip in the past two weeks. This points to potential hedging from PAYS shareholders looking to protect paper profits after the security's absurd run in the first half of the year.
There has been some growing skepticism around the shares in the form of short interest. In the last two reporting periods, short interest increased by almost 40% -- though just 3.4% of the total float is dedicated to short interest at this point. Also, today's losses have the security on the short-sale restricted list.