Schaeffer's Trading Floor Blog

Options Check-Up: Canadian Solar Inc., J.C. Penney Company, Inc., and Qihoo 360 Technology Co Ltd

Analyzing recent option activity for CSIQ, JCP, and QIHU

by 5/27/2014 7:06 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are alternative energy firm Canadian Solar Inc. (NASDAQ:CSIQ), department store operator J.C. Penney Company, Inc. (NYSE:JCP), and China-based Internet concern Qihoo 360 Technology Co Ltd (NYSE:QIHU). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on CSIQ, JCP, and QIHU.

  • CSIQ dropped 1.3% on Friday to close last week at $24.20, and has underperformed the broader S&P 500 Index (SPX) by more than 44 percentage points in the last three months. Not surprisingly, the stock's 50-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 0.60 -- 20 percentage points from an annual high. In other words, options traders have bought to open bearish bets, relative to bullish, at an accelerated clip in recent months. Now is an opportune time to wager using Canadian Solar Inc. contracts, too -- its Schaeffer's Volatility Index (SVI) stands at an annual low of 55%. Looking ahead, the company will appear at the FBR & Co. Energy Technology Summit and the Cowen Technology, Media & Telecom Conference on Wednesday and Thursday, respectively.

  • JCP gained 1.5% on Friday to finish at $9.01, but remains more than 50% lower on a year-over-year basis. Elsewhere, on the sentiment front, J.C. Penney Company, Inc. has racked up a 50-day ISE/CBOE/PHLX call/put volume ratio of 1.41, which ranks in the 79th percentile of its annual range. However, some of these bullish bets may have been at the hands of short sellers, as 31.3% of the stock's float is sold short. Meanwhile, JCP's short-term options can be had at a relative bargain, as the equity's SVI of 47% is higher than just 18% of all comparable readings from the past year. Turning to fundamentals, the retailer will be present at the Citi Global Consumer Conference on Wednesday.

  • Finally, QIHU -- which will report first-quarter earnings after the close this evening -- has more than doubled on a year-over-year basis. Last Friday, the stock added another 1.2% to settle the week at $89.08. As such, options players have been taking the upside on Qihoo 360 Technology Co Ltd, as evidenced by its 10-day ISE/CBOE/PHLX call/put volume ratio of 3.32 (though, again, a portion of this may be the work of short sellers hedging). Not only does this indicate that long calls have been scooped up at more than triple the rate of long puts during the past two weeks, but the ratio is higher than 86% of similar readings, looking back 12 months. Nevertheless, QIHU's front-month options are relatively inexpensive right now; the stock's SVI of 55% ranks near the bottom third of readings from the past year.
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