Sodastream International Ltd (SODA) has been on a technical tear during the last 12 months, boasting a year-to-date gain of around 37%, and a year-over-year advance of more than 87%. In fact, the home beverage maker touched a new multi-year high of $66.69 on May 15, after a well-received inaugural analyst day.
Also of note, the stock has trounced the broader S&P 500 Index (SPX) by about 19 percentage points during the past two months. On the charts, the stock's recent pullback was cushioned by its 20-week moving average, which has acted as a floor since late November. In light of this technical fortitude -- and the heavy skepticism plaguing the equity -- SODA could make for a lucrative bullish play in the near term.
Diving right in, speculators have been bearishly biased toward Sodastream International Ltd lately, according to the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). In fact, the equity's 50-day put/call volume ratio of 0.69 ranks in the 100th percentile of its annual range. Or, in simpler terms, traders have been picking up puts relative to calls at an annual-high pace in recent weeks.
Further evidence of this bearish attitude hovering over SODA -- which is presently perched at $61.31 -- lies in the fact that peak front-month put open interest resides at the 42.50 strike, which is deep out of the money yet holds 3,150 contracts outstanding. In other words, an unwinding of these pessimistic plays could end up boosting the shares even higher.
Meanwhile, although short interest declined by about 5% during the last two reporting periods, these bearish bets still account for a hefty 40% of SODA's available float, with about 7 million shares currently sold short. It would take more than 14 sessions to buy back these shorted shares, at the stock's average daily trading volume -- pointing to a significant amount of sideline cash. Should these skeptics continue to hit the exits, it could serve as a contrarian boon for the security.
Traders hoping to cash in on SODA's upward momentum may wish to consider buying the equity's July 52.50-strike calls, which are in the money and sport an ask price of $9.90. Since these options will expire at the close on July 19, this timeframe will not encompass the firm's next earnings report, which is tentatively scheduled for release during the week of Aug. 5.
