Schaeffer's Trading Floor Blog

Stocks to Watch Thursday: Hewlett-Packard Company, KB Home, and Renren Inc

Analyzing HPQ, KBH, and RENN ahead of tomorrow's trading

by 3/19/2014 4:40 PM
Stocks quoted in this article:

Momentum names that made notable moves on Wednesday and could continue to do so into Thursday's session include technology expert Hewlett-Packard Company (NYSE:HPQ), homebuilder KB Home (NYSE:KBH), and China-based social networking platform Renren Inc (NYSE:RENN). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Hewlett-Packard Company (NYSE:HPQ)

Hewlett-Packard closed its fourth consecutive session in the green today. In fact, after bouncing to a two-year high of $31.74 this afternoon, the stock settled with a 3.5% gain at $31.62 -- more than 9% higher than its March 13 closing price of $28.91. Calls were again the contracts of choice, outpacing the expected daily volume by more than three times, and outnumbering the amount of puts traded by a margin of more than 3-to-1. During the past 10 trading days, HPQ has racked up an International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.21, which ranks higher than 99% of comparable readings taken in the last year. This indicates that speculators have bought to open HPQ calls over puts at a near-annual-high rate recently.

KB Home (NYSE:KBH)

KB Home's strong fiscal first-quarter earnings results sent the shares flying 5.9% higher to close at $18.72. Not to mention, the good news inspired a surge in options activity. The total amount of contracts exchanged today nearly tripled the average daily volume, with about 69% of this activity occurring on the call side of the aisle. Considering 28% of the equity's float is sold short, it is possible that some of this call volume was created by short sellers picking up options-related insurance against additional upside for KBH.

Renren Inc (NYSE:RENN)

Renren's revenue forecast for the current quarter disappointed the experts on Wall Street, sending the shares 9.8% into the red to close at $3.40. After today's decline, RENN shares are now situated 29% below their 12-month peak of $4.79, tagged on March 6. Furthermore, the equity ended up on the short-sale restricted list today, causing a wave of put activity. In fact, put volume spiked to more than four times the average daily amount, with a significant number of traders zeroing in on the March and April series of contracts.


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