Schaeffer's Trading Floor Blog

Options Check-Up: LinkedIn Corp, Cree, Inc., and Canadian Solar Inc.

Analyzing recent option activity for LNKD, CREE, and CSIQ

by 6/20/2014 7:08 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are professional networking site LinkedIn Corp (NYSE:LNKD), semiconductor maker Cree, Inc. (NASDAQ:CREE), and alternative energy concern Canadian Solar Inc. (NASDAQ:CSIQ). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on LNKD, CREE, and CSIQ.

  • Although LNKD has plunged 23% year-to-date to trade at $166.99, the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio stands at an annual high of 2.56. Simply stated, 256 LNKD calls have been bought to open for every 100 puts during the past two weeks -- representing the fastest rate of call buying over the last 12 months. According to LinkedIn Corp's Schaeffer's Volatility Index (SVI) of 35% -- which ranks in the 13th annual percentile -- speculators can purchase short-term options at a relatively inexpensive price right now.

  • Likewise, speculators have ignored CREE's 20.9% year-to-date fall to $49.47, buying to open calls over puts at a near-annual-high clip in recent sessions. In fact, the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 11.81 ranks just 1 percentage point from a 12-month peak. Of note, however, some of the recent long call activity may have come at the hands of short sellers hedging against an unexpected rise, as short interest accounts for 10% of the equity's float, representing 7.4 sessions' worth of pent-up buying demand (at the shares' average daily volume). Meanwhile, Cree, Inc.'s SVI of 34% ranks in the 14th percentile of its annual range, indicating the stock's short-term options are attractively priced right now, from a volatility perspective.

  • CSIQ, on the other hand, appears more deserving of bullish attention, having gained 22.4% over the last month to perch at $27.43. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 8.36 ranks in the top 2% of its 12-month range. In other words, more than eight long calls have been scooped up for every long put over the past two weeks -- demonstrating one of the quickest speeds of the past year. Furthermore, premium on Canadian Solar Inc.'s short-term options is cheaper than usual, relatively speaking, as the stock's SVI of 62% ranks in the 12th annual percentile.

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