Schaeffer's Trading Floor Blog
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U.S. markets are higher in early afternoon trading, as traders applaud a strong start to earnings season and await the latest Federal Open Market Committee (FOMC) meeting minutes. At last check, three stocks making notable moves on the charts are tobacco titan Reynolds American, Inc. (NYSE:RAI), fast-casual eatery Chipotle Mexican Grill, Inc. (NYSE:CMG), and semiconductor concern Marvell Technology Group Ltd. (NASDAQ:MRVL). Here's a quick roundup of how this trio of names is performing so far.

  • RAI has jumped 2.7% to $62.94, and earlier notched a fresh all-time high of $63.39, thanks to reports that British American Tobacco could make an unsolicited bid for the company, of which it already owns a 42% stake. It is unclear what a takeover would mean for Lorillard Inc. (NYSE:LO), which was reportedly on the verge of merging with RAI -- in a deal allegedly worth more than $20 billion -- as early as late July. In today's options pits, speculators are gambling on even higher highs for RAI in the short term, buying to open the August 65 call. In fact, intraday call volume is running at four times the typical pace, and the stock's 30-day at-the-money implied volatility has jumped 14.1% to 28.2%, reflecting growing demand for short-term options. Elsewhere, despite RAI's long-term ascent -- the stock has added more than 25% in 2014 -- analysts remain wary, with just two out of eight offering up "strong buy" opinions. A fresh wave of upgrades could add fuel to Reynolds American, Inc.'s fire.

  • CMG has tacked on 2.5% to flirt with $601.00, after Wunderlich upped its price target on the shares to $560 from $542. The analysts also increased their same-store sales estimates for the second and third quarters, and lifted their full-year earnings forecast. Chipotle Mexican Grill, Inc. is slated to unveil its second-quarter figures after the closing bell on Monday, July 21, and it looks like option players are less enthusiastic than Wunderlich. 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 has ascended to a 52-week high of 2.20. In other words, option buyers have picked up CMG puts over calls at an annual-high clip during the past couple of weeks.

  • MRVL is down 1.8% at $14.38, after Oppenheimer downgraded the stock to "underperform" from "perform," citing escalating competition in China. The shares are now essentially flat on the year, and have underperformed the broader S&P 500 Index (SPX) by 10 percentage points during the past two months. Nevertheless, the options crowd remains optimistic, as evidenced by the accelerated call buying of late. Specifically, the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 9.67 stands just 8 percentage points from an annual peak. Short-term speculators are picking up Marvell Technology Group Ltd. options at a relative bargain, too, as the equity's Schaeffer's Volatility Index (SVI) of 25% rests just 8 percentage points from a 12-month low.

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