Schaeffer's Trading Floor Blog

Options Check-Up: Tesla Motors Inc (TSLA), Cree, Inc., and OmniVision Technologies, Inc.

Analyzing recent option activity for TSLA, CREE, and OVTI

by 5/27/2014 5:07 PM
Stocks quoted in this article:

Among the equities attracting notable attention from options traders of late are electric vehicle pioneer Tesla Motors Inc (NASDAQ:TSLA) and semiconductor concerns Cree, Inc. (NASDAQ:CREE) and OmniVision Technologies, Inc. (NASDAQ:OVTI). Below, we'll look at where options buyers are placing their TSLA, CREE, and OVTI bets, as well as how much they are paying to do so.

  • As my colleague Andrea Kramer pointed out earlier today, TSLA option prices are at an annual low, from a volatility perspective. Specifically, the stock's Schaeffer's Volatility Index (SVI) reading of 38% is lower than all comparable SVI measures taken during the last year. The options crowd has been focused on the call side of the fence of late; during the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 123 calls have been bought to open for every 100 puts. The resulting call/put volume ratio of 1.23 is higher than 69% of the past 12 months' worth of readings. Given that nearly 30% of the stock's float is sold short, though, some of this call-buying activity could be the work of short sellers growing concerned about an extended Tesla Motors Inc rally. Since hitting a three-month low of $177.22 on May 9, the equity has been in recovery mode, gaining 19.4% to its present perch of $211.56.

  • Call options have been popular -- relative to put options -- among CREE speculators as well. The stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.83 is in the top quartile of all annual readings, suggesting long calls have been scooped up at an accelerated pace (compared to puts) during the last 10 weeks. As it turns out, traders buying short-term options have been able to do so at a bargain. CREE's SVI of 32% stands just 4 percentage points shy of a new annual low. On the charts, Cree, Inc. has struggled in 2014, shedding more than 22% of its value through Tuesday's close of $48.73.

  • OVTI is booked for a trip to the earnings confessional after Thursday's close, with analysts expecting per-share bottom-line results of 26 cents, a one-nickel drop from the company's year-ago figure. Heading into this quarterly event, speculators have demonstrated a higher-than-average interest in long put options. This is evidenced by OVTI's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.75, which stands in the 75th annual percentile. Turning to Wall Street, just two of the eight analysts following OmniVision Technologies, Inc. deem the stock worthy of a "buy" or better rating, leaving the door wide open for upgrades, especially if OVTI delivers a positive earnings surprise -- as it has in each of the past six quarters. The equity is currently just a chip-shot away from a new annual high, and has tacked on 16.3% so far this year to hover around $20. Meanwhile, OVTI's SVI of 45% rests lower than nearly two-thirds of comparable readings from the past year, meaning short-term options are inexpensive, from a volatility standpoint.
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