U.S. Markets close in 26 mins

Bullish Options Trader Moves In on Wayfair Stock

Josh Selway

Wayfair Inc (NYSE:W) is extending a recent bounce from the $100 level, rising 6.2% today to trade at $114.63. In response, options volume is accelerated, and calls are outpacing puts on an overall basis. It looks as though one trader initiated a bull call spread at the May 115 and 150 calls, which they partially funded by selling the May 95 put.

Since this bull paid $11.78 for the call spread and brought in $10.70 by selling the puts, the trade has a net debit of $1.08, putting the breakeven point at $116.08 (bought call strike + net debit). Before today, Wayfair options traders had preferred put buying, based on the 10-day put/call volume ratio of 1.56 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

While the stock is rallying today, this still leaves it in a series of lower highs that's plagued it since March. In fact, today's price action has the equity testing the 50-day moving average, while previous resistance at the 80-day moving average looms further overhead. The $117-$120 range should also give traders some pause, given it's the site of the stock's range ahead of a huge February bull gap.

wayfair stock oct 17