Why Options Are Boiling on H&R Block Stock

H&R Block has long been a whipping boy for traders because of its steady loss of customers, but yesterday it showed signs of bottoming.

The most interesting option trade was in the November 13 calls, which saw a single block of 10,000 bought as the stock dropped but failed to reach a new intraday low. The company's stock snapped back hard and pushed higher, finishing the day up 0.94 percent at $11.76.

OptionMonster's real-time systems show that the calls went for just $0.15, so this trade was definitely a cheap shot looking for a push back to the upside over the short term. There was also heavy put selling in the name, with overall option volume slightly above the daily average.

Short interest in the tax-preparation company was about 11 percent of the float as of Oct. 15, and it's now trading for about 7 times forward earnings--numbers that could trigger a squeeze higher.


Russell does not hold significant numbers of shares of H&R Block.

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David Russell is a reporter and writer for OptionMonster.