Schaeffer's Trading Floor Blog

Biggest Movers: NQ Mobile Inc (ADR), Rite Aid Corporation, and Lorillard Inc.

NQ, RAD, and LO are making big moves in Thursday's trading

by 7/3/2014 12:36 PM
Stocks quoted in this article:

Nearing the end of today's holiday-shortened session, three of the top market movers are Internet service provider NQ Mobile Inc (ADR) (NYSE:NQ), drugstore chain Rite Aid Corporation (NYSE:RAD), and cigarette manufacturer Lorillard Inc. (NYSE:LO). Here's a quick roundup of how this trio of names is performing on the charts so far.

NQ hit a two-year low of $4.23 out of today's gate -- after announcing changes to its board of directors and giving a status update on its 2013 annual audit -- and at last check, the equity remained 31.7% lower at $4.62. Also this morning, NQ Mobile Inc (ADR) found itself on the short-sale restricted list, subsequently causing a rush of options activity. Specifically, put volume has more than quadrupled the expected intraday amount, while calls are changing hands at roughly three times the average intraday rate. Looking elsewhere, short interest on NQ spiked 28% during the most recent reporting period, bringing the total number of shares sold short to 14.4 million. This equates to a whopping 76.8% of the stock's available float.

RAD is up 4.7% today to trade at $7.51, after this morning posting strong same-store sales results for June. Option traders have responded enthusiastically, and call volume has shot up to more than two times what is typically seen at this time of day -- with the contracts outpacing puts by a roughly 6-to-1 margin. The 10 most active options today are all calls, six of which expire within the next six weeks. Today marks a change of pace from Rite Aid Corporation's recent options trend. In fact, the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.49 ranks in the 93rd annual percentile. So, while long calls have technically doubled puts during the past two weeks, the latter have been snatched up at a near-annual-high clip.

LO notched a fresh record high of $65.39 today, and was last seen trending 5.4% higher at $64.44. Responsible for today's spike was a report from CNBC that claimed Lorillard Inc. may be taken over by Reynolds American, Inc. (NYSE:RAI) within the next few weeks. In response, overall options volume on LO has ramped up to almost four times the average intraday amount, with roughly three-fourths of this activity taking place on the call side. From a broader perspective, LO's Schaeffer's put/call open interest ratio (SOIR) of 0.75 ranks in the bottom 2% of its 12-month range. Simply stated, short-term speculators are currently more call-focused than usual toward the stock.


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