Food stock Amira Nature Foods
Ltd (NYSE:ANFI) has been all over the charts during
the past 12 months. In mid-July, the shares shot to an annual high of $14.56,
only to fall to an all-time low of $2.51 just a month later. More recently, ANFI
jumped above $14 last month, but again slid precipitously following
this near-term peak. This has resulted in a 14-day Relative Strength Index (RSI) of
28 -- meaning the stock has technically been oversold.
Today, the shares are on the way back up, rallying a remarkable 27.7% to $10.40 -- making it the leading gainer on the New York Stock Exchange -- thanks to news the company plans to release interim financials this month. ANFI is now back in the black on a year-to-date basis, which is good news for options traders.
Specifically, the stock's 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 11.91, putting it in the 78th percentile of its annual range -- albeit amid extremely light volume. So not only have almost 12 calls been bought to open for every put, but this reading also displays a greater-than-usual appetite for ANFI calls relative to puts.
However, ANFI is heavily shorted, with a short-interest ratio of 5.10. With this being the case, it's possible recent call buyers are short sellers trying to protect themselves from an unexpected surge in the shares -- like we're seeing today.
In late-afternoon trading, both calls and puts are crossing at twice the normal intraday pace. The most popular option is the May 10 put, and if traders are buying to open positions, they're betting on Amira Nature Foods Ltd (NYSE:ANFI) falling back into single digits by the close on Friday, May 20, when the back-month options expire.
