Schaeffer's Trading Floor Blog
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are online retailer Amazon.com, Inc. (NASDAQ:AMZN), mining company Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), and alternative energy concern Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMZN, FCX, and YGE.

  • As my colleague Beth Gaston pointed out yesterday, AMZN didn't make much progress on the charts in February, closing the month with a slim 1% gain at $362.10. Nevertheless, option players have grown increasingly call-focused on the stock. In fact, Amazon.com, Inc.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.16 ranks in the top 25% of its annual range, pointing to a faster-than-usual rate of call buying, relative to put buying, of late. An extension of AMZN's technical rut may lead to a capitulation of bulls in the near future, which could create some headwinds for the shares. At least short-term speculators can rest assured knowing they got a great deal on their long plays. Right now, the equity's Schaeffer's Volatility Index (SVI) of 24% ranks lower than 89% of comparable readings from the past year, meaning short-term options are inexpensive, from a volatility perspective.

  • FCX -- which may have to declare force majeure in Indonesia -- also had a lackluster month, moving just a few cents higher to trade at $32.62. Still, its speculators have bought to open calls over puts at an accelerated pace during the past two weeks, as evidenced by the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.69, which ranks in the 67th annual percentile. Lucky for the short-term bettors -- Freeport-McMoRan Copper & Gold Inc.'s SVI is currently positioned at 24%, ranking lower than 88% of similar readings from the past 12 months. This means the equity's short-term options can be picked up at a bargain, relatively speaking.

  • Bullish speculators have taken over YGE's options pits during the past two weeks, buying to open 4,395 calls, compared to just 137 puts. The resulting 10-day ISE/CBOE/PHLX call/put volume ratio of 32.08 ranks in the 76th percentile of its 12-month range, signaling a higher-than-usual demand for long calls over long puts of late. Given that the shares have tacked on nearly 150% year-over-year to perch at $6.18, and 22.1% of the stock's float is sold short, it is possible that some of this call activity is the work of short sellers hedging their bearish bets against continued upside. Now is an opportune time to purchase front-month options on Yingli Green Energy Hold. Co. Ltd., as the equity's SVI of 83% ranks in the bottom 10% of its annual range.

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