Schaeffer's Trading Floor Blog

Stocks to Watch Tuesday: MasterCard Inc, F5 Networks, Inc., and Medtronic, Inc.

Analyzing MA, FFIV, and MDT ahead of tomorrow's trading

by 4/14/2014 4:54 PM
Stocks quoted in this article:

Momentum names that made notable moves on Monday and could continue to do so into Tuesday's session include credit card issuer MasterCard Inc (NYSE:MA), software producer F5 Networks, Inc. (NASDAQ:FFIV), and medical technology expert Medtronic, Inc. (NYSE:MDT). Here is a quick look at these stocks ahead of tomorrow's opening bell.

MasterCard Inc (NYSE:MA)

While MasterCard enjoyed a 3.6% pop to $71.18 today -- after this morning receiving an upgrade to "outperform" from "neutral" at Baird and a "sector perform" initiation at Pacific Crest -- the stock remains 14.8% below its year-to-date flat line. Nevertheless, option traders were quick to respond to MA's positive price action, exchanging two times the average daily amount of contracts, with a three-legged spread in the January 2015 series accounting for a healthy portion of this activity. What's more, calls were in higher demand than puts today, as they have been for the past couple of months. To be specific, MA's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.45 ranks in the 86th annual percentile, indicating calls have been bought to open over puts at an accelerated pace during the past 10 weeks. Should MasterCard continue its downward trajectory, these bullish bettors may hit the exits, creating additional pressure on the shares.

F5 Networks, Inc. (NASDAQ:FFIV)

F5 Networks bounced 3.9% higher today to close at $107.05, thanks to an upgrade to "buy" from "hold" at Stifel this morning. Subsequently, FFIV call volume more than doubled the expected daily amount, and outpaced put volume by a 2-to-1 margin. This represents a change of pace from FFIV's recent options trend, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.29 ranks higher than all other comparable readings from the past year, signifying an annual-high rate of put buying, relative to call buying, of late. Perhaps today's surge in call activity was created by short sellers picking up options-related insurance against additional upside, considering short interest makes up a lofty 10.4% of FFIV's available float.

Medtronic, Inc. (NYSE:MDT)

Medtronic sunk 1.9% today to close at $58.08, following a Friday evening court decision that temporarily halted sales of the company's aortic heart valve replacement system in the U.S., and two subsequent bearish brokerage notes this morning. (J.P. Morgan Securities downgraded the stock to "neutral" from "overweight," while Deutsche Bank cut its price target by $2 to $68.) It comes as no surprise then that puts were traded at a rate that more than quadrupled the daily norm, with April- and May-dated puts accounting for four of the five most active options of the day.

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