Schaeffer's Trading Floor Blog

Stocks to Watch Friday: Buffalo Wild Wings, Ciena Corporation, and Walter Energy, Inc.

Analyzing BWLD, CIEN, and WLT ahead of tomorrow's trading

by 3/20/2014 4:48 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 sports bar chain Buffalo Wild Wings (NASDAQ:BWLD), networking equipment provider Ciena Corporation (NYSE:CIEN), and coal producer Walter Energy, Inc. (NYSE:WLT). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Buffalo Wild Wings (NASDAQ:BWLD)

BWLD finished 1.3% higher today at $153.16, bringing the stock's year-over-year gain to just under 80%. Not surprisingly, call volume nearly quadrupled its daily average, led by the April 160 strike, which saw buy-to-open activity. However, short interest on BWLD rose 15.3% during the last two reporting periods, and now accounts for 7.7% of the stock's outstanding float -- meaning some of today's call buyers may be short sellers looking to hedge their bearish bets. If the shares continue to rise, the shorts may be forced to cover their bearish positions, stoking the equity's flames.

Ciena Corporation (NYSE:CIEN)

CIEN had a solid day on the charts, gaining 2.7% to finish at $24.10. The stock's March 24 and April 26 calls garnered notable attention, as several mid-sized blocks appear to have been bought to open. Calls have been the options of choice in CIEN's options pits recently, given the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 13.87, which ranks in the 90th percentile of its annual range. However, with nearly 19% of the security's float sold short, a portion of these long calls could be serving as upside protection.

Walter Energy, Inc. (NYSE:WLT)

WLT hit a near-decade low of $7.07 today. Ultimately, the equity closed 20% lower at $7.27, after BofA-Merrill Lynch predicted coal prices would tumble in the near future, and cut the stock's price target by $6 to $2. In addition, Walter Energy said it would sell a notable amount of debt. These developments landed the shares on the short-sale restricted list, pushing bears into the options pits, where put volume spiked to three times its single-session average. Puts have been the options of choice on WLT for a while, considering its 10-day ISE/CBOE/PHLX put/call volume ratio checks in at 1.22 -- or just 1 percentage point from a 12-month acme.


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