Schaeffer's Trading Floor Blog

Stocks to Watch Wednesday: Scientific Games Corp, Colgate-Palmolive Company, and Trulia Inc

Analyzing SGMS, CL, and TRLA ahead of tomorrow's trading

by 6/10/2014 5:03 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 slot machine supplier Scientific Games Corp (NASDAQ:SGMS), consumer products concern Colgate-Palmolive Company (NYSE:CL), and real estate website Trulia Inc (NYSE:TRLA). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Scientific Games Corp (NASDAQ:SGMS)

Scientific Games shares jumped 12.1% today to close at $10.25, after the company this morning appointed Gavin Isaacs (former CEO of SHFL entertainment Inc) as its new president and CEO. In response, SGMS call volume grew to quadruple the average daily amount, while put volume popped to 10 times what's typically seen. Most active was SGMS' June 10 put, which saw some sold-to-open activity as speculators apparently bet on the equity to maintain its perch atop $10, despite its disheartening year-to-date loss of nearly 40%. Nevertheless, calls outnumbered puts on an absolute basis, which is reflective of the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.06. The reading ranks in the lowest annual percentile, meaning short-term SGMS speculators are more call-heavy now than they have been at any other time during the last 12 months. Elsewhere, short interest increased by 53.7% during the latest reporting period, and now makes up 10.8% of the equity's float. Therefore, it is possible some of the recent long call activity has come at the hands of short sellers, hedging against a potential price jump in the shares (like the one today).

Colgate-Palmolive Company (NYSE:CL)

Colgate-Palmolive ran to a new record high of $68.94 today -- after receiving an upgrade to "outperform" from "market perform," and a price-target hike to $75 from $66, at BMO this morning -- and closed the session 0.4% higher at $68.69. Meanwhile, in the options pits, CL sports a top-heavy 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 17.87, with calls bought to open outnumbering puts by an almost 18-to-1 margin during the past two weeks. What's more, this ratio ranks just 2 percentage points from a 12-month peak, demonstrating a near-extreme rate of bullish betting over bearish recently. Likewise, the equity's SOIR sits at a 12-month low of 0.46, meaning short-term call open interest (relative to put open interest) is at an annual-high level. Today, it appears a significant number of speculators may have placed bullish bets on CL's June 70 call.

Trulia Inc (NYSE:TRLA)

Trulia bounced 3.4% today to close at $39.94, despite a lack of noteworthy news drivers. Stepping back, the stock has advanced an impressive 28.4% over the last month alone; however, short interest makes up a whopping 43.1% of the equity's available float. In fact, short interest on TRLA has increased by more than 133% since the start of 2014, and currently, it would take 9.3 sessions to cover these bearish bets (at average daily volumes). Should TRLA continue to make headway on the charts, a short-squeeze scenario may be in the cards, which could give the shares an extra boost.


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