Schaeffer's Trading Floor Blog

Options Check-Up: Amazon.com, Inc., Cree, Inc., and Starbucks Corporation

Analyzing recent option activity for AMZN, CREE, and SBUX

by 4/14/2014 5:01 PM
Stocks quoted in this article:

Among the equities attracting attention from options traders lately are online retailer Amazon.com, Inc. (NASDAQ:AMZN), semiconductor manufacturer Cree, Inc. (NASDAQ:CREE), and java giant Starbucks Corporation (NASDAQ:SBUX). Below, we'll look at how options buyers are betting on AMZN, CREE, and SBUX, and how much they are willing to pay to do so.

  • Amazon.com, Inc. (NASDAQ:AMZN) finished 1.3% higher at $315.91, amid rumors of an AMZN smartphone in the works, and after the firm said it sold out of Fire TVs. However, the stock on Friday fell to a near-six-month low, and remains beneath its 10-day moving average, which has pressured AMZN into the red since mid-March. While bearish betting has accelerated of late -- the stock's 10-day put/call volume ratio of 1.05 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits just 17 percentage points from an annual peak -- short-term traders remain bullishly biased. Specifically, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.95 stands higher than just 1% of all other readings from the past year, pointing to a bigger-than-usual call skew among options expiring within three months. Currently, those short-term options are expensive, relatively speaking; the equity's Schaeffer's Volatility Index (SVI) of 45% ranks in the 86th percentile of its 12-month range. Should Amazon.com steepen its year-to-date slide of nearly 21%, a mass exodus of option bulls could translate into contrarian headwinds.

  • Cree, Inc. (NASDAQ:CREE) spent part of the session south of breakeven, but tacked on 0.4% to settle at $54.92. The company will step up to the earnings plate after the close next Tuesday, April 22, and option buyers are picking up bullish bets at an accelerated clip, as the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 3.28 sits just 2 percentage points from an annual acme. Likewise, the equity's SOIR of 0.41 is higher than just one-tenth of all comparable readings from the past year, suggesting short-term speculators are more call-centered than usual. Right now, the stock's SVI of 58% registers in the 57th percentile of its annual range, implying that CREE's short-term contracts are slightly more expensive than usual right now, from a historical standpoint. Should Cree, Inc. disappoint in the earnings confessional next week, an unwinding of optimism in the options arena could exacerbate selling pressure on the stock, which has shed 12.2% in 2014.

  • Starbucks Corporation (NASDAQ:SBUX) also spent time on both sides of breakeven today, but ultimately resolved to the upside, adding 0.8% to $69.31. The speculative crowd is starting to take note of SBUX's technical struggles -- the stock has shed almost 12% year-to-date -- as its 50-day ISE/CBOE/PHLX put/call volume ratio of 0.80 is just 1 percentage point from a 52-week peak. However, there's still plenty of room on the bearish bandwagon, considering the equity's SOIR of 0.87 rests in the bottom third of its annual range. With Starbucks Corporation earnings around the corner -- the company will report after the close on Thursday, April 24 -- short-term options are growing more expensive. In fact, the stock's SVI of 27% is higher than 60% of all other readings from the past year. As with AMZN and CREE, the lingering optimism in the options pits could leave SBUX vulnerable to a bullish backlash, should the company report lackluster earnings later this month.

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