Schaeffer's Trading Floor Blog

Options Check-Up: First Solar, Inc., Yahoo! Inc., and EMC Corporation

Analyzing recent option activity for FSLR, YHOO, and EMC

by 4/22/2014 4:48 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are alternative energy provider First Solar, Inc. (NASDAQ:FSLR), Internet powerhouse Yahoo! Inc. (NASDAQ:YHOO), and virtual infrastructure provider EMC Corporation (NYSE:EMC). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on FSLR, YHOO, and EMC.

  • FSLR is up more than 30% year-to-date, after jumping 2.8% today to close at $71.12. Nevertheless, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought long puts (relative to long calls) at a faster-than-usual speed during the past two weeks. In fact, on these exchanges, FSLR's 10-day put/call volume ratio of 0.55 ranks in the bearishly skewed 71st annual percentile. Furthermore, Schaeffer's Volatility Index (SVI) for First Solar, Inc. comes in at 61%, which ranks in the 43rd percentile of its 12-month range. This means short-term FSLR options are slightly more affordable than usual, from a volatility perspective.

  • YHOO, on the other hand, has caught the attention of option bulls of late. During the past two weeks, the stock racked up an ISE/CBOE/PHLX call/put volume ratio of 4.50, which ranks higher than 80% of comparable readings from the past year. In other words, speculators have bought to open calls over puts at an accelerated pace recently. This makes sense, considering earlier this month, Yahoo! Inc. used its 50-week moving average as a springboard, advancing 12.4% from its April 11 year-to-date low of $32.15 to its current perch at $36.14. What's more, short-term YHOO options are attractively priced right now, relatively speaking, as the equity's SVI of 35% ranks in the bottom 35% of its 12-month range.

  • Finally, option traders have upped the bearish betting on EMC, ahead of the company's first-quarter earnings report tomorrow morning. To be specific, EMC Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.87 ranks in the 82nd annual percentile, demonstrating puts have been scooped up, relative to calls, at an increased rate in recent sessions. Leading up to the quarterly event, short-term EMC options are priced at a relative discount, with the stock's SVI of 23% ranking in the 39th percentile of its 12-month range. Meanwhile, on the charts, EMC shares are sitting 4.4% lower on a one-month basis to trade at $26.76.

permanent link

Stocks to Watch Wednesday: MGM Resorts International, Arch Coal Inc, and Molycorp Inc

Analyzing MGM, ACI, and MCP ahead of tomorrow's trading

by 4/22/2014 4:36 PM
Stocks quoted in this article:

Momentum names that made notable moves on Tuesday and could continue to do so into Wednesday's session include casino concern MGM Resorts International (NYSE:MGM), coal producer Arch Coal Inc (NYSE:ACI), and rare earths issue Molycorp Inc (NYSE:MCP). Here is a quick look at these stocks ahead of tomorrow's opening bell.

MGM Resorts International (NYSE:MGM)

MGM rallied 5.6% to end at $24.97, thanks to reports of a rebound in Macau gambling revenue in the week ended April 21. The stock saw roughly 27,000 calls cross the tape -- a 56% mark-up to its average daily volume. For comparison, around 15,000 MGM puts changed hands. From a broader sentiment standpoint, today's preference for calls marked a change of pace on the long side. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.74 stands just 8 percentage points from a 52-week peak. In other words, option buyers have picked up MGM puts over calls at a faster-than-usual clip during the past two weeks. In the same skeptical vein, short interest on the stock grew 27.2% during the past two reporting periods, and now accounts for 9.2% of MGM's total available float. On the charts, MGM Resorts International has almost doubled in the past year. Off the charts, the company will report quarterly earnings before the open next Tuesday, April 29. A solid earnings showing could spark a mass exodus of option bears and/or a short-squeeze situation -- both potential catalysts higher.

Arch Coal Inc (NYSE:ACI)

ACI swallowed a loss of 8.5% to end at $4.55 -- and landed on the short-sale restricted list -- after the firm reported a steeper-than-expected per-share loss in the first quarter, and offered lackluster guidance. Daily call volume traded at nearly twice the norm, with roughly 21,000 contracts exchanged -- almost four times the number of ACI puts traded. Most active was the May 5 call, where more than 4,400 contracts changed hands, primarily at the ask price, suggesting they were bought. What's more, the ISE confirms that a healthy portion of these front-month calls were purchased to open. However, considering 18.7% of Arch Coal Inc.'s total available float is sold short, it's possible that the speculators bought the calls to protect their shorted shares against a short-term rebound north of $5. Whatever the motive, today's appetite for long calls merely echoes the growing trend on the ISE, CBOE, and PHLX, where ACI sports a 10-day call/put volume ratio of 11.45 -- in the 86th percentile of its annual range.

Molycorp Inc (NYSE:MCP)

MCP finished with a 4% gain at $4.94, though options traders today gambled on a short-term ceiling for the shares. Around 18,000 MCP calls changed hands -- almost three times the norm -- with most of the action centering on the weekly 5/23 5.50 strike. Close to 3,500 calls traded at the aforementioned strike -- nearly three-fourths at the bid price, suggesting they were sold -- and volume surpassed open interest, hinting at new positions. By writing the calls to open, the sellers expect MCP to remain south of $5.50 through the close on Friday, May 23, when the options expire. However, Molycorp Inc is no stranger to skepticism. Short interest represents nearly 17 sessions' worth of pent-up buying demand, at the equity's average pace of trading. MCP is tentatively scheduled to report first-quarter earnings in early May.


permanent link

Earnings on Deck: Facebook Inc (FB), Zynga Inc, and QUALCOMM, Inc.

Previewing FB, ZNGA, and QCOM ahead of their upcoming earnings reports

by 4/22/2014 2:33 PM
Stocks quoted in this article:

Earnings season is in full swing this week, though the heart of the tech-sector batting order is still on deck. Along with Apple Inc. (NASDAQ:AAPL), social networking concerns Facebook Inc (NASDAQ:FB) and Zynga Inc (NASDAQ:ZNGA), as well as digital communications specialist QUALCOMM, Inc. (NASDAQ:QCOM), will unveil their quarterly reports tomorrow night. Here's a quick look at these names as earnings approach.

  • Facebook Inc (NASDAQ:FB) will report first-quarter earnings after the close tomorrow. The company has matched or exceeded analysts' per-share profit predictions in six of the past seven quarters, averaging a gain of 8.3% in the subsequent session. In fact, the shares jumped 14.1% in the session after Facebook's last earnings report. Despite its stellar earnings history, FB puts have been picking up steam. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.57 sits just 4 percentage points from an annual high. In other words, option traders have bought to open FB puts over calls at a much faster-than-usual clip during the past couple of weeks. At last check, the shares of FB have added 2.9% to flirt with $63.01, thanks to a pre-market upgrade at Credit Suisse.

  • Zynga Inc (NASDAQ:ZNGA) will also unleash its first-quarter figures after the close tomorrow. While the company has met or topped the Street's bottom-line estimates in seven of the past eight quarters, the stock averages a one-week post-earnings loss of 2.3%. However, in the wake of its last earnings report, ZNGA rallied 25.6% in the subsequent week. Ahead of tomorrow's report, options players are exercising more caution than usual. The security's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.25 stands higher than 69% of all comparable readings from the past year. Likewise, analysts are skeptical, as just two out of 19 brokerage firms have doled out "strong buy" opinions. In afternoon trading, ZNGA is following its sector peers into the black, up 1.6% at $4.54.

  • Finally, QUALCOMM, Inc. (NASDAQ:QCOM) will release its fiscal second-quarter earnings tomorrow night. The firm has matched or topped analysts' per-share estimates in five of the past seven quarters, averaging a one-week post-earnings gain of 2.2%. Against this backdrop, options traders and analysts are in the bullish corner ahead of tomorrow's report. The stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.13 stands just 7 percentage points from a 12-month acme, and 20 out of 26 brokerage firms offer up "buy" or better endorsements. At last check, QCOM is fractionally higher at $81, after Bernstein lifted its price target on the equity to $90 from $85.

permanent link

Midday Market Stats: Dow Jones Industrial Average Soars on Earnings, M&A Optimism

The Home Depot, Inc. rallies after an upgrade; Harley-Davidson Inc tags a post-earnings high

by 4/22/2014 12:01 PM
Stocks quoted in this article:

The Dow Jones Industrial Average (INDEXDJX:.DJI) has blazed a steady path higher today, and was last seen with a lead of 90.5 points, or 0.6%, at 16,539.79. A relatively well-received round of big-cap earnings, as well as a slew of M&A activity -- particularly in the pharmaceutical sector -- has bolstered optimism about the collective corporate pocketbook. In addition, the National Association of Realtors said its gauge of existing home sales fell 0.2% in March, representing a narrower-than-expected month-over-month decline. Against this backdrop, the S&P 500 Index (SPX) is on pace for its sixth straight finish in the black.

Here are a few noteworthy stats at midday:

  1. The equity put/call volume ratio across all 12 options exchanges is currently perched at 0.80, with calls outpacing puts. So far today, 3.38 million calls have changed hands, compared to 2.72 million puts.

  2. One name seeing heavy call trading today is home improvement retailer The Home Depot, Inc. (NYSE:HD), which is up 2.7% to $80.05. Bolstering the blue chip was an upgrade to "outperform" from "market perform" at BMO, which also lifted its price target on the equity to $90 from $82. So far, more than 93% of today's option volume has traded on the call side.

  3. The advance/decline ratio on the New York Stock Exchange (NYSE) stands at 2.60, with advancing stocks more than doubling declining issues.

  4. One of the biggest upward movers on the Big Board so far today is motorcycle guru Harley-Davidson Inc (NYSE:HOG), which is up 7.5% at $72.57 after issuing stronger-than-expected first-quarter earnings. Earlier in the session, HOG touched a seven-year peak of $73.50.

  5. The CBOE Volatility Index (VIX) is down 0.3 point, or 2.2%, at 12.96. A daily close south of 13 would be a first for the "fear barometer" since Jan. 22.

  6. Today's put/call volume ratio on the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) stands at 2.92, with put volume nearly tripling call volume so far. The ETN has shed 0.4% at midday to $40.77.

View a real-time chart of the Dow Jones Industrial Average (INDEXDJX:.DJI) 2 Minute.

Unusual Option Volume at Midday


permanent link

Will Ongoing Struggles Finally Spook MasterCard Inc (MA) Bulls?

MA is scheduled to report first-quarter earnings next Thursday morning

by 4/22/2014 11:12 AM
Stocks quoted in this article:

Credit card issuer MasterCard Inc (NYSE:MA) has attracted more than its fair share of options bulls of late. During the past five sessions on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE), nearly 13,100 calls have been bought to open versus roughly 9,800 puts, yielding a top-heavy call/put volume ratio of 1.33.

Taking a step back to include 10 sessions' worth of data -- including information from the NASDAQ OMX PHLX (PHLX) -- yields a similarly call-skewed ratio. Specifically, MA's 10-day ISE/CBOE/PHLX call/put volume ratio registers at 1.22, with calls bought to open outstripping puts by a roughly 6-to-5 margin in recent weeks. Moreover, this metric is higher than 82% of comparable readings from the past 12 months, conveying traders have scooped up long calls (relative to puts) at a faster-than-usual clip lately.

In a similar vein, Schaeffer's put/call open interest ratio (SOIR) currently rests at 1.05, with put open interest edging out call open interest among options expiring in the next three months. Furthermore, the SOIR ranks in the bottom quartile of its annual range, suggesting short-term traders are more call-focused than usual on MasterCard.

If that's not enough, sentiment on the Street is bullish. An impressive 17 out of 28 covering analysts rate the shares a "strong buy," to go with another two "buy" recommendations; comparatively, the stock has received nine "holds" and not a single "sell" opinion. Also, MA's consensus 12-month price target of $89.62 is more than 20% higher than the current share price of $74.48.

Moving to technicals, MA has lost nearly 11% on a year-to-date basis, and has underperformed the broader S&P 500 Index (SPX) by nearly 10 percentage points in the last three months. At present, the shares are also battling resistance at their descending 10-week moving average.

Meanwhile, on the fundamental front, the credit card giant will take its turn under the earnings spotlight next Thursday morning. Last time around, an earnings miss sent the shares 5% lower in the subsequent session. Should that happen again -- and MasterCard Inc (NYSE:MA) continue to struggle on the charts -- an exodus of option bulls (along with potential analyst downgrades) could pressure the shares south.


permanent link
1 
2 
3 
4 
5 
… 
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.