Schaeffer's Trading Floor Blog

Earnings Preview: Halliburton Company, Hasbro, Inc., and Steel Dynamics, Inc.

Analyzing recent option activity on Halliburton Company (HAL), Hasbro, Inc. (HAS), and Steel Dynamics, Inc. (STLD)

by 4/17/2015 12:36 PM
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Among the stocks gearing up to report earnings on Monday are oil-and-gas firm Halliburton Company (NYSE:HAL), toymaker Hasbro, Inc. (NASDAQ:HAS), and commodity concern Steel Dynamics, Inc. (NASDAQ:STLD). Below, we'll gauge the pre-earnings temperature of HAL, HAS, and STLD.

  • HAL has started to bounce back from the steep losses it suffered as crude prices tanked during the second half of 2014, with the shares up 19% year-to-date to reach $46.79. However, traders have remained skeptical of Halliburton Company, as its 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.12 is the highest reading taken over the past year. Meanwhile, HAL has notched gains in the session immediately following its last four earnings releases, for an average post-report boost of 1.5% over that time frame. Traders are paying historically tame prices for their short-term bets on the equity, as its Schaeffer's Volatility Index (SVI) of 30% ranks in the 27th percentile of its annual range.

  • HAS has been a technical standout, with the shares up 20% year-to-date to hit $66.03 -- and yesterday notching a fresh all-time high of $66.32. What's more, sector rival Mattel, Inc. (NASDAQ:MAT) posted impressive first-quarter earnings last night, raising expectations for Hasbro, Inc. ahead of its trip to the earnings confessional Monday morning. Traders have favored calls over puts in recent weeks, as HAS' 50-day ISE/CBOE/PHLX call/put volume ratio of 3.73 stands in the 98th percentile of its annual range. On the earnings front, the stock has been impressive, with the shares gaining an average of 2.8% in the session immediately following its last four earnings reports -- including a 7% pop in February. Near-term options are pricing in somewhat inflated volatility expectations, as HAS' SVI of 27% ranks higher than 72% of all similar readings from the past year.

  • STLD has been choppy over the past year, with the shares tumbling from a six-year high of $25.51 on Sept. 18 to a low of $16.51 on Jan. 29. Despite this rocky price action, the shares of Steel Dynamics, Inc. are still up 12.1% year-over-year to trade at $20.44. Sentiment in the options pits has been optimistic, as STLD's 10-day ISE/CBOE/PHLX call/put volume ratio of 40.12 is higher than 86% of all equivalent readings from the past 12 months. Meanwhile, in the session immediately following its last four earnings reports, STLD has been unpredictable, with results ranging from a 4.8% loss last April to a 4.5% gain in July. Traders are paying historically modest prices for their short-term bets on the stock, as its SVI of 35% sits in the 41st percentile of its annual range.

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ARIAD Pharmaceuticals, Inc. (ARIA) Option Bulls Cheer New Highs

Ariad Pharmaceuticals, Inc. (ARIA) hit a new annual high earlier

by 4/17/2015 12:06 PM
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Call buyers have been active in Ariad Pharmaceuticals, Inc.'s (NASDAQ:ARIA) options pits in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, ARIA's 50-day call/put volume ratio of 14.51 across these exchanges ranks in the 86th annual percentile.

Echoing this call-skewed bias is ARIA's Schaeffer's put/call open interest ratio (SOIR) of 0.31, which rests lower than 61% of all comparable readings taken in the past year. In other words, short-term speculators are slightly more call-heavy than usual toward the security.

In the front-month series -- which expires at tonight's close -- peak call open interest is found at the April 9 strike, where 4,310 contracts are housed. Looking out to the May-dated series, call players have shown a preference for the 10 strike, where 16,190 contracts currently reside. According to the ISE, CBOE, and PHLX, the majority of the positions at both strikes have been bought to open in recent months. Of note, a move north of $10 would mark the equity's highest perch since October 2013.

Technically speaking, ARIA has been a standout, boasting a year-to-date lead of 31%. In fact, the shares hit an annual high of $9.23 earlier, after the firm unveiled updated clinical data on its alk+ non-small cell lung cancer treatment, brigatinib. However, the security has not been able to avoid broad-market headwinds, and was last seen off 1.1% at $9.


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Analyst Update: Etsy, Inc., Wayfair Inc., and CytRx Corporation

Analysts adjusted their ratings on Etsy Inc (ETSY), Wayfair Inc (W), and CytRx Corporation (CYTR)

by 4/17/2015 11:31 AM
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Analysts are weighing in today on Wall Street newcomer Etsy Inc (NASDAQ:ETSY), online retailer Wayfair Inc (NYSE:W), and biotech firm CytRx Corporation (NASDAQ:CYTR). Here's a quick look at today's brokerage notes on ETSY, W, and CYTR.

  • The shares of ETSY debuted on the Street yesterday, hitting an intraday high of $35.74 before settling at $29.77 -- 86% north of their IPO price of $16. Today, Etsy Inc is has lost some steam, down 3.3% at $29. Meanwhile, Wedbush reaffirmed both its "neutral" rating and $14 price target on the equity, which represents a 51.7% deficit to current trading levels. Additionally, the brokerage firm said that while it expects Etsy "to enjoy rapid near-term growth rates within its niche as it increases its marketing spend some questionable seller practices may draw scrutiny, eventually limiting volume growth." Plus, Wedbush opined, ETSY's valuation is now "well beyond the high end of any comparable group."

  • Goldman Sachs lowered its opinion on W to "neutral" from "buy" -- and removed it from its "America's Buy List" -- sending the shares 6.5% lower to $32.30. Technically speaking, Wayfair Inc has been a standout performer in 2015, with the shares up 62.7% year-to-date, in part due to a post-earnings bull gap last month. Accordingly, options traders have been call-skewed in recent weeks -- over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 7.27 W calls have been bought to open for every put. Elsewhere, short sellers have taken a shine to the security, as a staggering 41.4% of its available float is sold short. It would take these bettors nearly 12 sessions to cover their positions, at average trading volumes.

  • Oppenheimer initiated coverage on CYTR with an "outperform" rating and a $10 price target -- nearly double the shares' current perch -- citing optimism about the firm's experimental cancer drug. At last check, the shares of CytRx Corporation were up 14% to $5.13, bringing their year-to-date advance to 87.2%. In the options pits, short-term speculators have been more call-heavy than usual, as CYTR's Schaeffer's put/call open interest ratio (SOIR) of 0.16 is lower than 78% of all similar readings from the past year. Meanwhile, nearly 30% of the stock's available float is sold short, which would take over 17 sessions to cover, at average trading volumes.

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Analyst Downgrades: Advanced Micro Devices, Inc., The Manitowoc Company, Inc., and American Express Company

Analysts downwardly revised their ratings on Advanced Micro Devices, Inc. (AMD), Manitowoc Company Inc (MTW), and American Express Company (AXP)

by 4/17/2015 9:34 AM
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Analysts are weighing in today on semiconductor concern Advanced Micro Devices, Inc. (NASDAQ:AMD), heavy machinery maker Manitowoc Company Inc (NYSE:MTW), and credit card issue American Express Company (NYSE:AXP). Here's a quick roundup of today's bearish brokerage notes on AMD, MTW, and AXP.

  • AMD is down 11.9% at the open to trade at $2.53, after the company's dreary first-quarter earnings report was met with price-target cuts from Wedbush (to $2.25) and Canaccord Genuity (to $2). While today's price move just echoes the equity's historical post-earnings performance, AMD could find a foothold in the $2.60 region -- an area that contained the shares' most recent pullback. On the sentiment front, traders have shown a fondness for puts over calls in the April-dated series, which expires at tonight's close. Specifically, AMD's front-month gamma-weighted Schaeffer's put/call open interest ratio (SOIR) is docked at a top-heavy 1.46. Drilling down, the April 2.50 strike is home to peak put open interest, with more than 67,000 contracts in residence.

  • MTW was hit with no fewer than six price-target cuts, after the firm said it would report a first-quarter pretax loss (subscription required) when it heads into the earnings confessional the evening of Wednesday, April 29. Baird, for example, reduced its price target to $26 from $28, while BMO downwardly revised its target by $2 to $18. Technically speaking, the stock has shed 39% since hitting a nearly six-year high of $33.50 last July, and more recently, has encountered a stern layer of resistance from its 180-day moving average. The security is extending this decline today, off 6.8% out of the gate at $20.29. Options traders, meanwhile, have been quick to initiate long puts in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Manitowoc Company Inc's 50-day put/call volume ratio of 2.18 rests higher than all other similar readings taken in the past year.

  • AXP is down 3.2%, following the blue chip's first-quarter revenue miss. What's more, a number of brokerage firms reduced their price targets on the shares; specifically, Bernstein (to $94), Credit Suisse (to $76), J.P. Morgan Securities (to $82), RBC (to $69), and UBS (to $82). On the charts, the stock put in a dismal performance in 2015, off 15.8% at $78.30, amid pressure from its 50-day moving average. However, option traders have shown a distinct preference for long calls over puts of late. Elsewhere, short interest plunged 20.6% in the latest reporting period, and now accounts for just 1.1% of American Express Company's available float.

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Buzz Stocks: Schlumberger Limited, Athersys Inc., and 58.com Inc.

Today's stocks to watch in the news include Schlumberger Limited (SLB), Athersys, Inc. (ATHX), and 58.com Inc (ADR) (WUBA)

by 4/17/2015 9:31 AM
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U.S. stocks appear poised to plummet this morning, as traders react to a fresh batch of earnings reports and China's new short-selling rules. In company news, today's stocks to watch include oil-and-gas concern Schlumberger Limited (NYSE:SLB), biotech firm Athersys, Inc. (NASDAQ:ATHX), and Chinese e-commerce issue 58.com Inc (ADR) (NYSE:WUBA).

  • The shares of SLB are 3.1% higher in electronic trading, after the firm reported first-quarter figures and announced it will lay off another 11,000 employees, in addition to the 9,000 layoffs the firm made in January. In addition, Schlumberger Limited expects to cut production and exploration spending, especially in North America. On the charts, SLB shares are up 21.5% from their Jan. 14 annual low of $75.60, to close yesterday at $91.89. However, traders have favored puts over calls in the options pits lately, as SLB's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.22 reads in the 99th percentile of its annual range. Echoing this indicator is the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.90, which is higher than all equivalent readings from the past year. Simply stated, short-term speculators have never been this put-heavy on SLB over the past 12 months.

  • News that ATHX's stroke treatment drug MultiStem failed mid-stage study testing has the shares down over 56% ahead of the bell. It's been a rough week for Athersys, Inc.; heading into today's session, the shares were already down 28% week-to-date, landing at $2.18 yesterday. Some traders are likely cheering the plummet, as ATHX's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.90 stands higher than 99% of all similar readings taken over the past year. Likewise, the equity's SOIR of 0.74 stands higher than 96% of all other readings from the past year.

  • The shares of WUBA are 6.1% lower in pre-market trading, after the firm confirmed that it is purchasing a 43% stake in sector peer Ganji.com for $412.2 million in cash and approximately 34 million ordinary shares. Technically speaking, 58.com Inc has been an outperformer, with the shares up over 57% year-over-year to close Thursday at $67.57. What's more, the equity notched an all-time high of $69.24 just yesterday. Despite this positive price action, puts have been popular in the options pits, as WUBA's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.01 stands in the 74th percentile of its annual range. Elsewhere, short interest accounts for 22.7% of WUBA's available float, which would take nearly seven sessions to cover, at average trading volumes.

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