Schaeffer's Trading Floor Blog

Options Check-Up: J.C. Penney Company, Inc., First Solar, Inc., and Yahoo! Inc.

Analyzing recent option activity for JCP, FSLR, and YHOO

by 6/16/2014 5:01 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are department store operator J.C. Penney Company, Inc. (NYSE:JCP), alternative energy issue First Solar, Inc. (NASDAQ:FSLR), and Internet bigwig Yahoo! Inc. (NASDAQ:YHOO). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on JCP, FSLR, and YHOO.

  • Although JCP has dropped 11.2% over the last month to trade at $8.64, option traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open four times as many calls as puts during the past two weeks -- representing the fastest rate of call buying (relative to put buying) during the past 12 months. Given that the stock's Schaeffer's Volatility Index (SVI) of 46% ranks in the 17th percentile of its 12-month range, short-term options are attractively priced right now (from a volatility perspective). Meanwhile, J.C. Penney Company, Inc. is making headlines today, after a judge ruled the company interfered with a contract between Macy's Inc. (NYSE:M) and Martha Stewart Living Omnimedia, Inc. (NYSE:MSO)

  • Having gained 3.7% today, FSLR is now up 22.3% year-to-date to perch at $66.85, and option traders have responded to the equity's positive price action by placing bullish bets over bearish at a quicker-than-usual speed in recent sessions. To be specific, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.33 ranks higher than 80% of similar readings from the past year. Now is a good time to scoop up short-term bets on First Solar, Inc. too, as its SVI of 40% ranks just 3 percentage points from a 12-month low, meaning short-term contracts are relatively inexpensive right now.

  • Long calls have been in higher-than-usual demand demand (relative to long puts) in YHOO's options pits as well, per the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.41, which ranks in the 78th annual percentile. Furthermore, premium on Yahoo! Inc.'s short-term options is leaning toward the cheaper side, historically speaking, with the equity's SVI of 36% ranking in the 36th percentile of its 12-month range. Meanwhile, on the charts, YHOO has advanced more than 4% over the last month to trade near $34.81. Looking ahead, the company will host its annual shareholder meeting on Wednesday, June 25, where a possible topic of discussion could be Alibaba's impending IPO. YHOO holds a major stake in the e-commerce giant.

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