Schaeffer's Trading Floor Blog

Options Check-Up: Zynga Inc, Ford Motor Company, and Netflix, Inc.

Analyzing recent option activity for ZNGA, F, and NFLX

by 6/5/2014 7:38 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are online social gaming concern Zynga Inc (NASDAQ:ZNGA), automaker Ford Motor Company (NYSE:F), and streaming entertainment provider Netflix, Inc. (NASDAQ:NFLX). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on ZNGA, F, and NFLX.

  • Although ZNGA has plunged 44.5% from its March 11 annual high of $5.89 to its current perch at $3.27, the equity sports a top-heavy 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 12.82, with calls bought to open outnumbering puts by an almost 13-to-1 margin during the past two weeks. What's more, this ratio ranks in the top 3% of its 12-month range, meaning the recent rate of call buying, relative to put buying, is at a near-annual-high level. Of course, this lopsided ratio could be due to the limited profit potential of long puts on a low-priced stock. Zynga Inc's Schaeffer's Volatility Index (SVI) of 66% ranks in the 53rd annual percentile, meaning prices on the equity's front-month options are about average, from a volatility perspective.

  • F -- which has tacked on 12.9% over the last four months to linger near $16.79 -- has seen a surge in bullish betting in its options pits of late. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 6.03 ranks just 5 percentage points from a 12-month peak, demonstrating a healthier-than-usual appetite for long calls over puts in recent sessions. Given that the stock's SVI of 16% ranks lower than 86% of comparable readings from the past year, front-month options on Ford Motor Company are relatively inexpensive right now.

  • NFLX has shot up 24.2% over the last month to perch at $423.21. However, the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.06 ranks in the 70th annual percentile, pointing to an accelerated rate of put buying (compared to call buying) during the past two weeks. Premium on short-term NFLX options is more affordable than usual, relatively speaking, as the stock's SVI of 37% ranks in the bottom 18% of its 12-month range. On a fundamental note, Netflix, Inc. will be hosting its annual shareholder meeting on Monday, June 9.
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