Schaeffer's Trading Floor Blog

Stocks to Watch Wednesday: Charles Schwab Corp, The Coca-Cola Company, and Expedia Inc

Analyzing SCHW, KO, and EXPE ahead of tomorrow's trading

by 6/17/2014 5:05 PM
Stocks quoted in this article:

Momentum names that made notable moves on Tuesday and could continue to do so into Wednesday's session are financial concern Charles Schwab Corp (NYSE:SCHW), beverage behemoth The Coca-Cola Company (NYSE:KO), and travel website Expedia Inc (NASDAQ:EXPE). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Charles Schwab Corp (NYSE:SCHW)

SCHW rocketed 5.5% higher to $27.30 today, as traders digested a hearing on high-frequency trading in Washington, D.C. (the likes of which will be echoed tomorrow in front of the Senate Banking Committee). Demand for SCHW's short-term options was on the rise, as the stock's 30-day at-the-money implied volatility jumped 8.5% to 26.6%. Calls were especially popular, with roughly 13,000 contracts traded -- 18 times the norm, and 7.5 times the number of SCHW puts exchanged. However, the preference for bullish bets marks a shift in sentiment in the options pits. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), SCHW sports a 10-day put/call volume ratio of 3.79 -- in the 94th percentile of its annual range. In other words, option buyers have picked up SCHW puts over calls at a near-annual-high clip during the past two weeks. Should the stock extend today's upward momentum, a mass exodus of option bears could add fuel to the security's fire.

The Coca-Cola Company (NYSE:KO)

After soaring 1.3% -- and coming within a chip-shot of annual-high territory -- out of the gate, KO pared its gain to 0.6% by the close, settling at $40.92. Bursting the stock's proverbial bubble was activist investor Warren Buffett, after the Oracle of Omaha squashed rumors that he plans to take the blue chip private. In any event, KO calls traded at nearly twice the normal pace, and outnumbered puts by a more than 2-to-1 margin. Today's appetite for long calls is par for the course for KO, though; the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 4.73 stands higher than 93% of all comparable readings from the past year. Meanwhile, the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.74 ranks in the 35th percentile of its annual range, suggesting short-term options players are more call-skewed than usual right now.

Expedia Inc (NASDAQ:EXPE)

EXPE -- which hosted its annual shareholder meeting today -- gapped 4.1% higher to end at $77.62, after Susquehanna upgraded the shares to "positive" from "neutral" and lifted their price target to $90 from $79. Against this backdrop, calls traded at three times the average clip, and it looks like some speculators cashed in their chips by selling to close the June 77.50 calls. Despite its year-to-date advance of more than 11%, EXPE remains plagued by pessimism -- which could translate into a boon for the shares. Specifically, short interest jumped 33.7% during the past two reporting periods, and now accounts for more than 10% of the stock's float. In fact, at the equity's average daily trading volume, it would take seven sessions to repurchase all of these bearish bets -- plenty of fuel for a potential short-covering rally.


permanent link
ADVERTISEMENT
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.