Schaeffer's Trading Floor Blog
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are financial firm The Blackstone Group L.P. (NYSE:BX), fast-casual eatery Chipotle Mexican Grill, Inc. (NYSE:CMG), and mine operator Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on BX, CMG, and FCX.

  • BX finished the session 1.8% lower at $29.07, and is now off nearly 18% from its six-year high of $35.39, tagged on March 11. On the news front today, the private-equity name bought The Cosmopolitan of Las Vegas from Deutsche Bank for $1.7 billion. In terms of sentiment, The Blackstone Group L.P. sports a 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.57, which ranks in the top 30% of its annual range. An unwinding of these bullish bets amid the stock's recent pullback could spell additional losses. Currently, short-term BX options are pricing in modest volatility expectations, as the equity's Schaeffer's Volatility Index (SVI) of 27% ranks in the bottom one-fifth of readings from the last year.

  • CMG slid to a 1.7% loss to close at $495.92, after shareholders gave a thumbs down to executive pay levels at the restaurant chain's annual meeting this morning. The shares have struggled for some time, underperforming the broader S&P 500 Index (SPX) by nearly 17 percentage points during the last two months. Nevertheless, Chipotle Mexican Grill, Inc. has racked up a 10-day ISE/CBOE/PHLX call/put volume ratio of 1.17, which sits a mere 2 percentage points from an annual high. If the stock keeps struggling on the charts, these option bulls could hit the exits, creating headwinds for the shares. June-dated CMG options are attractively priced right now; the stock's SVI of 25% is in the 15th percentile of its annual range.

  • Finally, FCX dropped 0.8% lower to finish Thursday's session at $35.21, despite a price-target hike to $43 from $40 at Morgan Stanley. In the options pits, Freeport-McMoran Copper & Gold Inc.'s 50-day ISE/CBOE/PHLX put/call volume ratio registers at 0.50, higher than 83% of comparable readings from the previous 52 weeks. Also, the equity's SVI of 20% rests at an annual low, meaning short-term FCX options are affordable right now, from a volatility perspective.

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