Schaeffer's Trading Floor Blog

Options Check-Up: Sirius XM Holdings Inc., Nokia Corporation (ADR), and Visa Inc

Analyzing recent option activity for SIRI, NOK, and V

by 3/23/2014 4:56 PM
Stocks quoted in this article:

Among the equities attracting notable attention from options traders of late are satellite radio pioneer Sirius XM Holdings Inc. (NASDAQ:SIRI), Finnish telecom concern Nokia Corporation (ADR) (NYSE:NOK), and credit card giant Visa Inc (NYSE:V). Below, we'll look at how options buyers are betting on SIRI, NOK, and V, and how much they are willing to pay to do so.

  • Calls have been the flavor of the past two weeks for SIRI, as the speculative crowd has been buying to open more than 25 calls for every put. The resulting 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put ratio of 25.45 is just 2 percentage points away from an annual bullish peak. More than 6% of SIRI's available float is currently sold short, however, meaning a portion of the recent call buying could be the result of short sellers hedging their bearish bets. Meanwhile, as shareholders digest the news of Liberty Media Corp's (NASDAQ:LMCA) change in plans, the stock has continued to shuffle sideways. Year-to-date, the shares are down 4% at $3.35. No matter the motive, recent call buyers have at least been securing their speculative positions at a relative bargain; Schaeffer's Volatility Index (SVI) for SIRI stands at 30%, or lower than two-thirds of similar readings taken during the last 12 months. In other words, short-term Sirius XM Holdings Inc. options are relatively inexpensive, from a volatility perspective.

  • NOK, on the other hand, is seeing a slight preference for long puts of late. Its 10-day ISE/CBOE/PHLX put/call volume ratio of 0.35 stands in the 60th annual percentile, reflecting a slightly above-average pace of put buying, relative to call buying, during the past two weeks. Short-term Nokia Corporation (ADR) option premiums are currently trading near historical lows, per the stock's SVI of 47%, which is lower than all but 7% of readings from the past 52 weeks. Finally, despite the stock's year-over-year advance of about 115% to rest at $7.17, analysts are skeptical, with 15 of 20 brokerages assigning the equity a rating of "hold" or worse.

  • Finally, while V shares are little changed for 2014 -- up just 0.3% to $223.37 -- the stock maintains a 12-month positive return of roughly 40%. Over the past couple of months, the options crowd has been scooping up long puts at a relatively rapid clip. Visa Inc's 50-day put/call volume ratio of 0.67 on the ISE, CBOE, and PHLX ranks higher than 84% of similar readings during the past year. Like SIRI and NOK, Visa option premiums are relatively affordable as far as volatility is concerned. Its SVI of 21% is lower than 68% of other readings measured during the last 12 months.

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