Market Overview

Is LogMeIn Headed Lower?

Shares of LogMeIn (NASDAQ: LOGM) are trading lower on the session by 3.43%, at $39.70. The stock had been trading higher earlier in the session, but has since tumbled lower on heavy volume. Shares have already turned over the daily volume with nearly three hours left to trade.

LogMeIn has ticking higher over the past seven weeks, though shares have found resistance near $42.00 more than once. It appears that LOGM may not be ready for a bull run just yet; in fact, given its performance throughout the back half of 2011, shares are in danger of giving up the 50-day moving average and heading lower.

If shares were to break below $36.50, the stock would confirm that a major medium-to-long term downtrend has been established.

Options action is favoring the puts today with the February 2012 $40.00 strike trading 4,625 times on no open interest; 95% of the action has been on the offer, indicating buyers. That is roughly 600x normal put volume, by the way.

With 10.87% short interest, this is not a new story. Clearly, traders have been legging into LogMeIn on pops. Perhaps they are right in that shares are heading lower. With that said, given the high short interest it is best to play the down side through the option markets. While volatility is high, this is the best way to gain from a selloff and have a limited max loss.

LogMeIn, Inc. is a provider of on-demand, remote-connectivity, and support solutions to small and medium-sized businesses, information technology service providers, mobile carriers and consumers

Posted-In: Options Markets

 

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