Schaeffer's Trading Floor Blog

Options Check-Up: Facebook Inc (FB), SunPower Corporation, and Dollar General Corp.

Analyzing recent option activity for FB, SPWR, and DG

by 6/1/2014 6:36 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are social media giant Facebook Inc (NASDAQ:FB), alternative energy concern SunPower Corporation (NASDAQ:SPWR), and discount retailer Dollar General Corp. (NYSE:DG). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on FB, SPWR, and DG.

  • Although FB is up more than 22% from its Jan. 27 year-to-date low of $51.85 to perch at $63.30, the equity's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.54 ranks in the top 3% of its 12-month range. In other words, while long calls have roughly doubled puts on an absolute basis, the latter have been scooped up at a near-annual-high clip during the past 10 weeks. An extension of Facebook Inc's upward trajectory may cause some of these bearish bettors to hit the exits, which could provide an extra boost for the shares. Meanwhile, those looking to purchase short-term options on FB can do so at a discount right now, from a volatility perspective, as the stock's Schaeffer's Volatility Index (SVI) of 32% ranks lower than 86% of comparable readings from the past year.

  • SPWR has advanced 31% from its April 15 year-to-date low of $25.38 to linger near $33.34. However, the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.57 ranks in the highest percentile of its 12-month range, demonstrating an annual-high rate of put buying, relative to call buying, during the past two weeks. Now is an opportune time to purchase short-term contracts on SunPower Corporation, relatively speaking, considering the stock's SVI of 40% ranks lower than all similar readings taken during the last year.

  • It is just more of the same for DG, which sports a 50-day ISE/CBOE/PHLX put/call volume ratio of 1.25, in the top percentile of its annual range. This means -- heading into the company's first-quarter earnings report on Tuesday morning, June 3 -- option traders have placed bearish bets over bullish at their fastest rate, compared to the past 12 months. Those looking to place short-term bets on Dollar General can still do so inexpensively, as the equity's SVI of 26% ranks in the 17th annual percentile. Meanwhile, on the charts, DG shares are sitting almost 11% lower year-to-date to trade at $53.78.
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