Schaeffer's Trading Floor Blog

Options Check-Up: Amazon.com, Inc. (AMZN), F5 Networks, Inc. (FFIV), and Western Digital Corp (WDC)

Drilling down on recent option activity for AMZN, FFIV, and WDC

by 10/23/2013 8:52 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are Kindle creator Amazon.com, Inc. (NASDAQ:AMZN), networking specialist F5 Networks, Inc. (NASDAQ:FFIV), and data storage provider Western Digital Corp (NASDAQ:WDC). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMZN, FFIV, and WDC.

  • Traders prefer bullish options on AMZN, as 1.35 calls have been bought to open for every put during the past 10 days, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This figure ranks higher than 96% of comparable readings taken over the past year, as traders have rarely purchased calls over puts at a faster pace. After tomorrow's close, Amazon.com, Inc. (NASDAQ:AMZN) is on deck to announce its third-quarter profit and revenue figures -- but volatility expectations are fairly tame. The stock's Schaeffer's Volatility Index (SVI) of 39% arrives in the 45th percentile, which means near-term options are priced near the middle of their annual range.

  • Calls have also been in heavy rotation on FFIV, judging by the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.76. This ratio registers in the 72nd percentile of its annual range, suggesting a stronger-than-usual appetite for bullish bets over bearish. With the company's fiscal fourth-quarter earnings scheduled to hit the Street after today's closing bell, short-term bets on F5 Networks, Inc. are getting a little pricey. The SVI weighs in at 51%, which ranks in the 70th annual percentile -- meaning front-month bets on FFIV have been more expensive, from a volatility standpoint, only 30% of the time in the last year.

  • Speculators favor calls over puts by a wide margin on WDC, with the security's 10-day call/put volume ratio from the ISE, CBOE, and PHLX checking in at 2.13 -- in the lofty 81st percentile of its annual range. Looking ahead, Western Digital Corp is due to confess its fiscal first-quarter results tomorrow after the market closes. Ahead of the event, short-term volatility expectations have ticked higher, and WDC's SVI now stands at 41%, in the 56th annual percentile.

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