Schaeffer's Trading Floor Blog

Stocks to Watch Thursday: SanDisk Corporation, Southwest Airlines Co, and Coach Inc

Analyzing SNDK, LUV, and COH ahead of tomorrow's trading

by 5/28/2014 4:37 PM
Stocks quoted in this article:

Three stocks that made noteworthy moves on Wednesday and could continue to do so into Thursday's session include flash memory pioneer SanDisk Corporation (NASDAQ:SNDK), low-cost air carrier Southwest Airlines Co (NYSE:LUV), and upscale accessories concern Coach Inc (NYSE:COH). Here is a quick look at these stocks ahead of tomorrow's opening bell.

SanDisk Corporation (NASDAQ:SNDK)

On the heels of an overnight price-target hike from UBS, SanDisk touched a new all-time high of $96.83 today before settling up 0.6% at $96.03. So far in 2014, the stock has surged more than 36%, trouncing the performance of the broader market. Option traders descended upon the SNDK pits today, sending call volume spiking 50% above typical levels. Most active was the out-of-the-money July 100 call, which saw what appeared to be a healthy dose of buy-to-open activity. From a longer-term perspective, however, put buyers and call buyers have been neck-and-neck. Specifically, the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio stands at 0.99, which resides in the 72nd annual percentile. In short, despite the stock's impressive technical prowess, the demand for long puts (relative to calls) has been above average during the last 10 weeks.

Southwest Airlines Co (NYSE:LUV)

Airline stocks were in rally mode once again today, and Southwest -- which is in the process of introducing mobile boarding-pass functionality at all of its domestic airports -- participated by notching a new all-time high of $26.53. At the closing bell, the shares were up 2.2% at $26.43, bringing its year-over-year gain to roughly 85%. Call volume was more than twice what is typically seen on an average trading day for LUV, and option buyers were able to scoop up short-term positions at a relative bargain. Schaeffer's Volatility Index (SVI) for LUV stands at 20%, which is just 5 percentage points away from an annual low.

Coach Inc (NYSE:COH)

Amid news that its primary rival Michael Kors Holdings Ltd (NYSE:KORS) posted a banner quarter in terms of profit and revenue, Coach Inc shares stumbled to $40.41 -- their lowest point since September 2010. By the close, COH had pared its losses to 1.3%, ending the session at $40.81. The options crowd has remained rather hopeful on the struggling retailer, even as it has lagged the broader S&P 500 Index (SPX) by more than 18 percentage points over the last two months. To wit, the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 1.50 is higher than 90% of all other readings taken within the last 12 months. In today's action, however, puts outnumbered calls by a modest margin. The June 40 put was in focus, as investors appeared to be buying to open the near-the-money front-month contracts.

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