Schaeffer's Trading Floor Blog

Options Check-Up: Facebook Inc (FB), Tesla Motors Inc (TSLA), and SINA Corp

Analyzing recent option activity for FB, TSLA, and SINA

by 4/21/2014 8:24 AM
Stocks quoted in this article:

Among the equities attracting attention from options traders lately are social media giant Facebook Inc (NASDAQ:FB), electric car maker Tesla Motors Inc (NASDAQ:TSLA), and Chinese Internet concern SINA Corp (NASDAQ:SINA). Below, we'll look at how options buyers are betting on FB, TSLA, and SINA, and how much they are willing to pay to do so.

  • Short-term options are growing more expensive as Facebook Inc (NASDAQ:FB) prepares for its post-close turn in the earnings confessional on Wednesday. The stock's Schaeffer's Volatility Index (SVI) now sits at 62%, above 65% of all other readings from the past year, suggesting short-term contracts are fetching a pretty penny, from a volatility standpoint. Digging deeper, traders have purchased FB puts over calls at a near-annual-high clip during the past two weeks, as the equity's 10-day put/call volume ratio of 0.60 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands just 2 percentage points from a 52-week peak. Echoing that, FB on Thursday saw roughly 149,000 puts change hands -- a 13% mark-up to its average daily volume. By the close, Facebook Inc shares gave up 1.3% to settle at $58.94.

  • Tesla Motors Inc (NASDAQ:TSLA) has also been more popular than usual among option bears of late. The stock sports a 10-day put/call volume ratio of 1.05 on the ISE, CBOE, and PHLX, which registers in the 94th percentile of its annual range. Meanwhile, the equity's Schaeffer's Volatility Scorecard (SVS) stands at a lofty 98, implying that TSLA has tended to make outsized moves relative to what the options market has priced in -- a boon for option buyers. Analysts are also skeptical when it comes to the automaker, as seven out of 12 brokerage firms maintain "hold" or "sell" opinions. While the equity has given back about a quarter of its value since tagging a record high of $265 in late February, the stock remains almost 32% higher year-to-date, closing a choppy session at $198.12 on Thursday.

  • SINA Corp (NASDAQ:SINA) notched a gain of 6.7% on Thursday to finish at $56.55, thanks to a solid IPO from Weibo Corp (ADR) (NASDAQ:WB), of which SINA owns a majority stake. One speculator is counting on more upside for the shares over the intermediate term, initiating a three-legged, bullishly biased spread in the September series. Specifically, the trader sold to open September 40 puts and September 70 calls, and bought to open September 60 calls, resulting in a net debit of $1.03 per trio of contracts. The spread will be profitable if SINA ends atop $61.03 (bought call strike plus net debit) when September-dated options expire. While the stock hasn't been much to write home about on the charts -- it's shed almost a third of its value in 2014, and Thursday marked its first daily close atop its 10-day trendline since March 17 -- short-term options speculators were already in the bulls' corner. In fact, the security's Schaeffer's put/call open interest ratio (SOIR) of 0.39 stands higher than just 22% of all comparable readings from the past year. What's more, those options are slightly more expensive than usual, as evidenced by SINA's SVI of 63%, in the 57th percentile of its annual range.

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