Schaeffer's Trading Floor Blog

Options Check-Up: Groupon Inc, Nordstrom, Inc., and Visa Inc

Analyzing recent option activity for GRPN, JWN, and V

by 5/18/2014 5:05 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are daily deals specialist Groupon Inc (NASDAQ:GRPN), department store operator Nordstrom, Inc. (NYSE:JWN), and credit card titan Visa Inc (NYSE:V). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on GRPN, JWN, and V.

  • GRPN slipped slightly in Friday's session, finishing 0.7% lower at $6.01, after several top hedge funds revealed that they reduced or eliminated their holdings in the momentum name. Option traders, on the other hand, have been placing bullish bets on Groupon Inc , which will host its annual shareholder meeting Tuesday morning. The stock's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 4.32 -- higher than 78% of similar readings, looking back one year. However, with nearly 12% of GRPN's float sold short, it's possible some of the long calls were scooped up by short sellers looking to hedge their bearish bets. In any case, short-term Groupon options are relatively cheap right now; the security's Schaeffer's Volatility Index (SVI) of 50% sits in the 9th percentile of its annual range.

  • JWN soared on Friday, after reporting better-than-expected first-quarter earnings on Thursday night, and receiving several bullish brokerage notes during the overnight hours. By session's end, the retailer had settled with a 14.7% daily gain at $70.55, and came away with a new record high of $70.71. In the options pits, however, traders have been betting against Nordstrom, Inc., which has racked up a 50-day ISE/CBOE/PHLX put/call volume ratio of 2.02, in the 88th percentile of its annual range. If the stock continues to rally, an unwinding of these bearish positions could spell additional gains for the shares. Elsewhere, front-month JWN options are relatively affordable right now, as the equity's SVI of 22% rests near the bottom one-third of all other readings taken in the last 12 months.

  • Finally, V added 1.1% on Friday to close the week at $209.81. Bearish betting has picked up in the stock's options pits of late. Visa Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.14 sits just 2 percentage points from an annual pessimistic peak. Meanwhile, short-term options can be had at bargain-basement prices, as V's SVI of 17% is lower than 97% of similar readings, dating back one year.

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