USA Technologies, Inc. (NASDAQ:USAT) stock is trading up 13% at $6.67, after hedge fund Hudson Executive Capital reported a 12% stake in the vending services provider, calling it an "attractive investment." In response, USAT options volume is soaring.
By the numbers, more than 1,600 calls have traded, well above the daily average, and puts are crossing at 13 times the average. New positions are opening at the July 7.50 put, most crossing near the bid price. Some traders seem to be well-positioned for today's rally, since 3,713 calls were bought to open during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), compared to just four puts.
Meanwhile, short interest has been rising, up 16% in the last two reporting periods, now standing at 9.34 million shares -- 19.2% of the float. Going by the average daily trading volume, this accounts for 12.7 days' worth of buying power. As such, some of the recent call buying may have been at the hands of shorts hedging against any upside risk.
USAT shares are now testing the $7 region from which they gapped lower back in February. The stock traded as low as $3.19 shortly afterward, after trading as high as $16.83 in 2018.