Options Trading News

October 17, 2016  Mon 12:10 PM CT


Pandora Media is falling after a key downgrade today, but traders are looking it to bounce by the end of the week.

optionMONSTER's market scanner shows that about 5,000 October 12.50 calls were purchased for $0.29 to $0.42 today. This represents new positioning, as open interest in the strike was a mere 4 contracts before the session began.

Long calls lock in the price where investors can buy stock, allowing them to profit from a rally with limited capital at risk. Their cheap cost can also generate significant leverage on a percentage basis if shares move in the right direction. (See our Education section)

P is down 3.08 percent to $12.44 in afternoon trading after Bank of America / Merrill Lynch downgraded the stock to "underperform" from "neutral" and cut its target price to $9 from $14. The online-radio network, which is down 10 percent in the last week, is scheduled to announce quarterly results after the close on Oct. 25.

Overall option volume in the name is twice its daily average so far today. Calls outnumber puts by a bullish 4-to-1 ratio.

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