Schaeffer's Trading Floor Blog

Options Check-Up: Apple Inc. (AAPL), BlackBerry Ltd, and Chesapeake Energy Corporation

Analyzing recent option activity for AAPL, BBRY, and CHK

by 5/6/2014 5:20 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are tech powerhouse Apple Inc. (NASDAQ:AAPL), smartphone maker BlackBerry Ltd (NASDAQ:BBRY), and commodity concern Chesapeake Energy Corporation (NYSE:CHK). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AAPL, BBRY, and CHK.

  • AAPL extended its reach into annual-high territory, climbing as far as $604.41, before settling below breakeven at $594.41 at the close. Stepping back, the stock boasts a three-month return of about 16%; however, its 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.71 ranks just 6 percentage points from a 12-month peak, indicating that although long calls outnumber long puts on an absolute basis, the rate of put buying (relative to call buying) is nearing annual-high levels. Those looking to place short-term bets on Apple Inc. right now can do so at a bargain, from a volatility standpoint, as the equity's Schaeffer's Volatility Index (SVI) of 20% ranks lower than 81% of comparable readings from the past year.

  • Option players have upped the bullish ante on BBRY, which is up 9.4% from its April 14 low of $7.01 to perch at $7.67. Over the past 10 trading days, speculators have bought to open more than four calls for every put on BBRY, resulting in an ISE/CBOE/PHLX call/put volume ratio of 4.18. What's more, this ratio ranks in the 88th annual percentile, demonstrating the pace of bullish betting over bearish has been heavier than usual recently. Some of this activity may have been the work of short sellers, picking up insurance on their bearish bets, as 21.4% of BBRY's stock is sold short. From a contrarian perspective, however, a potential unwinding of these bearish bets could provide the shares with a ift. Now is an opportune time to purchase front-month options on BlackBerry Ltd, with the equity's SVI of 44% ranking in the bottom 16% of its 12-month range.

  • CHK -- which is slated to report first-quarter earnings tomorrow morning -- has racked up a 50-day ISE/CBOE/PHLX call/put volume ratio of 4.00, which ranks in the 87th annual percentile. In other words, while the company has been preparing for its quarterly event, option players have scooped up long calls over puts at an accelerated pace. Given that 9.3% of CHK's float is sold short, some of these call players may actually be short sellers in disguise, hedging against more upside (or a potential post-earnings pop). Right now, premium on short-term Chesapeake Energy Corporation options is relatively expensive, as the equity's SVI of 40% sits in the 86th percentile of its 12-month range. Meanwhile, on the charts, CHK is up 6.6% on a one-month basis to trade at $28.35.

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