Schaeffer's Trading Floor Blog

Stocks to Watch Friday: Alcoa Inc, Halozyme Therapeutics, Inc., and Five Below Inc

Analyzing AA, HALO, and FIVE ahead of tomorrow's trading

by 6/5/2014 4:56 PM
Stocks quoted in this article:

Momentum names that made notable moves on Thursday and could continue to do so into Friday's session include aluminum producer Alcoa Inc (NYSE:AA), biopharmaceutical firm Halozyme Therapeutics, Inc. (NASDAQ:HALO), and tween retailer Five Below Inc (NASDAQ:FIVE). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Alcoa Inc (NYSE:AA)

From Monday's bullish brokerage note to the debut of its aluminum-air battery-powered car, Alcoa has enjoyed a string of upbeat headlines this week. Today, the equity spiked to a fresh two-year high of $14.13, and closed the session with a 1.3% gain at $14.00, amid news that Ford Motor Company's (NYSE:F) "automotive weight-loss program" could have significant benefits on the aluminum industry. While AA saw an acceleration of overall options activity today, calls were technically the contracts of choice, outnumbering puts by an almost 2-to-1 margin. This is just business as usual in AA's options pits, as evidenced by the equity's top-heavy 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 13.54, which ranks in the top 1% of its 12-month range. In other word, the rate of AA call buying, relative to put buying, has been at a near-annual-high level during the past two weeks. Given that short interest represents 5.6 sessions' worth of pent-up buying demand (at the shares' average daily volume), it is possible that some of this long call activity came at the hands of short sellers, hedging against additional upside. However, it should also be noted that a continuation of Alcoa's upward trajectory may cause a short-squeeze scenario, which could add fuel to the stock's fire.

Halozyme Therapeutics, Inc. (NASDAQ:HALO)

Halozyme jumped 12% today to close at $9.05, after the Food and Drug Administration (FDA) removed a hold on the clinical trial of HALO's pancreatic cancer treatment. In response, speculators snatched up calls at a rate that more than quadrupled the daily norm, and by the end of the session, these contracts outnumbered puts by an almost 10-to-1 margin. Stepping back, HALO sports a 20-day ISE/CBOE/PHLX call/put volume ratio of 17.02, as roughly 17 calls have been bought to open for every put during the past month. Considering 17% of the equity's float is sold short, however, some of these call buyers may have actually been short sellers in disguise, picking up "insurance" on continued upside.

Five Below Inc (NASDAQ:FIVE)

Five Below's stronger-than-expected first-quarter earnings report was quickly overshadowed by the company's gloomy outlook for the current quarter. Subsequently, FIVE shares dropped 4.1% today to close at $35.04. Meanwhile, overall options volume soared to roughly nine times what is typically seen in one session, with speculators piling in on both the call and put sides of the aisle. As usual, calls took a healthy lead over puts today, highlighting a longer-term trend in FIVE's options pits. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.77 ranks in the 56th annual percentile. So, while long calls have nearly quadrupled puts during the past two weeks, this rate of call buying (relative to put buying) is fairly typical on FIVE.

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