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The following is a list of small-cap stocks, with market caps between $100M-$500M, that have recently experienced an increase in the Put/Call ratio, which is based on open interest of option contracts. In addition, the Put/Call ratios of these companies are at the upper end of their annual ranges.

Some technical traders view the Put/Call ratio as a contrary indicator when it reaches extreme highs or lows. In other words, because the stocks mentioned below have a high number of open put option positions relative to call option positions, contrarians would think most of the stocks mentioned below are set for a rally. Do you agree?

Options data sourced from Schaeffer's, short float and performance data sourced from Finviz. (Please note: All changes in the Put/Call ratio occur between 2/24 - 3/09.)
Click for expanded images


The list has been sorted by the change in the Put/Call ratio.

1. Dawson Geophysical Co. (DWSN)
: Oil and Gas Equipment and Services Industry. Market cap of $379.05M. Current Put/Call ratio at 5.12 vs. previous Put/Call ratio at 3.64 (+40.66% change).

Note that this is a risky stock that is significantly more volatile than the overall market (beta = 2.02). Exhibiting strong upside momentum - currently trading 5.26% above its SMA20, 24.56% above its SMA50, and 66.34% above its SMA200. The stock has had a good month, gaining 24.89%.

Other Highlights:

Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 233.5K shares during the most recent quarter, vs. 94.0K net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 38.0K shares during the most recent quarter, vs. 309.9K net shares purchased in the previous quarter.

2. Yongye International, Inc. (YONG):
Agricultural Chemicals Industry. Market cap of $349.05M. Current Put/Call ratio at 1.1 vs. previous Put/Call ratio at 1.01 (+8.91% change). The stock has lost 18.74% over the last year.

Other Highlights:

Judging by the company's cash holdings, shares look to offer good value at current levels. Price / Cashflow per Share, based on the most recent quarter's cash flow numbers, came in at 4.62, lower than the industry average of 15.28. It's also worth pointing out that the company's trailing 12-month Price / Cashflow per Share came in at 6.77, lower than the industry average of 13.14.

Analysts expect the company to generate higher than normal earnings growth in the future. EPS growth for the next year is projected at 38.68%, higher than the industry average at 17.66%. EPS growth over the next five years projected at 35.%, vs. the industry average at 12.5%.

The company's capital spending accelerated by 38.35% over the last five years, much faster than the industry average of 11.29%. At least theoretically, this makes them more competitive over the coming years, since their operational assets are more up-to-date.

3. Pharmacyclics Inc. (PCYC):
Drug Manufacturer. Market cap of $312.18M. Current Put/Call ratio at 2.21 vs. previous Put/Call ratio at 2.05 (+7.8% change). The stock has lost 2.07% over the last year.

Other Highlights:

Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 3.3M shares during the most recent quarter, vs. 1.2M net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 1.9M shares during the most recent quarter, vs. 897.3K net shares purchased in the previous quarter.

Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 493,694 shares per year (over last two years).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Contrarian Ideas: 3 Small Caps With Rising Put Volume