Schaeffer's Trading Floor Blog

Options Check-Up: Citigroup Inc, Starbucks Corporation, and Finisar Corporation

Analyzing recent option activity for C, SBUX, and FNSR

by 6/10/2014 7:16 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are global financial firm Citigroup Inc (NYSE:C), coffee expert Starbucks Corporation (NASDAQ:SBUX), and telecom equipment maker Finisar Corporation (NASDAQ:FNSR). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on C, SBUX, and FNSR.

  • Not only have C long calls more than doubled long puts during the past two weeks, but the resulting 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.53 ranks in the 67th annual percentile, indicating the recent rate of call buying (relative to put buying) is faster than usual. Now is a prime time to place short-term bets on Citigroup Inc, which has added 6.2% over the last month to perch at $49.58. The equity's Schaeffer's Volatility Index (SVI) sits at an annual low of 14%, meaning short-term C options are cheaper now than they have been at any other time in the past 12 months, from a volatility standpoint.

  • Like C, SBUX has seen more than two calls bought to open for every put in recent sessions, and the 10-day ISE/CBOE/PHLX call/put volume ratio of 2.68 ranks 8 percentage points from a 12-month peak, demonstrating a near-annual-high rate of bullish betting over bearish in the stock's options pits of late. Of note, however, Starbucks Corporation is sitting 4.1% lower for the year at $75.18, and a continuation of the equity's downward trajectory may lead option bulls to hit the exits, which could exacerbate the shares' losses. Meanwhile, the stock's SVI of 15% ranks in the lowest percentile of its annual range, indicating near-term SBUX options are attractively priced right now, relatively speaking.

  • While FNSR is slated to report fiscal fourth-quarter earnings after Thursday's close, recent speculators have been seemingly bearish toward the equity-- which is down 14% from its April 24 three-year high of $28.85 to trade at $24.81. The stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.54 ranks higher than 97% of comparable readings from the past year, with puts being bought to open over calls at an accelerated clip during the past 10 weeks. Furthermore, ahead of Finisar Corporation's quarterly event, short-term options can still be purchased at a relative discount, as the equity's SVI of 54% ranks in the 38th annual percentile.

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