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

Among the stocks attracting attention from options traders lately are LED issue Cree, Inc. (NASDAQ:CREE), semiconductor concern Micron Technology, Inc. (NASDAQ:MU), and video game maker Take-Two Interactive Software, Inc. (NASDAQ:TTWO). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on CREE, MU, and TTWO.

  • CREE jumped 0.9% today to close at $45.40, after this morning announcing an increase to its stock repurchase program. Looking back, today's positive price action marks a change of pace for the shares, which are situated 21.8% below their April 22 pre-earnings closing price of $58.05. Not surprisingly, in CREE's options pits, bearish bets have been placed (relative to their bullish counterparts) at a near-annual-high rate during the past two weeks. This is evidenced by the fact that the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.90 ranks just 4 percentage points from a 12-month peak. Meanwhile, Cree, Inc.'s Schaeffer's Volatility Index (SVI) of 36% ranks in the bottom 13% of its annual range, meaning those looking to purchase front-month bets on the stock can do so at a bargain right now, from a volatility perspective.

  • MU reached another decade-plus high today, at $27.40, and after closing the session 2% higher at $26.93, the stock positioned itself 21.3% above its month-ago price. Micron Technology, Inc. has been a favorite among option bulls of late. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.31 ranks in the 74th annual percentile, demonstrating an accelerated rate of call buying, relative to put buying, in recent sessions. Luckily for those interested in short-term options, these contracts can be purchased at a discount, relatively speaking, as MU's SVI of 38% ranks 9 percentage points from a 12-month low.

  • While long calls on TTWO have more than quadrupled puts during the past two weeks, speculators have been picking up the latter at a faster-than-usual pace, according to the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.23, which ranks in the 63rd percentile of its 12-month range. On the charts, Take-Two Interactive Software, Inc. is up 20% year-to-date to perch at $20.85, yet speculators remain bearish. Perhaps some are wary of the company's fiscal fourth-quarter earnings report, scheduled for after the close on Tuesday, May 13. Regardless, with the big announcement right around the corner, premium on TTWO's front-month options is inflated, relatively speaking, as the stock's SVI of 56% ranks higher than 79% of comparable readings from the past year.

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