At Green Mountain... Options, Shorts, and Charts Trumped Earnings (GMCR, NFLX)

Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR) was mixed enough in the earnings report that you might have been scratching your head as to how the reaction would have been going into the halt.  The company blew past earnings estimates because the bar was set so low, but guidance looks mixed and the inventories are building.  What may be three key driving factors for the post-earnings gains are the massive short interest, the skewing of options trading, and what was an oversold position.

The shares had felt oversold because the stock was cut in more than half.  That being said, the stock was already recovering from its 2011 lows of the end of the year.  The options trading in the calls yesterday was skewed and that $5 to $6 “expected move” based upon pre-earnings options prices just felt like it might be understating earnings.  That short interest of 26+ million in shares was perhaps the biggest driving force behind today’s gains as well.

You do not always get to see a 23% gain to $66.20 on triple-average volume on mixed news without there being some extraordinary circumstances.  In some ways. the move felt almost identical to that of Netflix, Inc. (NASDAQ: NFLX).