Schaeffer's Trading Floor Blog

Buzz Stocks: Yahoo! Inc.,, Inc., Post Holdings Inc, and Sony Corp (ADR)

Today's stocks to watch in the news include YHOO, AMZN, POST, and SNE

by 4/17/2014 9:25 AM
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Futures are pointed lower ahead of the bell, as investors process a glut of earnings data from a number of blue-chip names. In company news, here are some stocks to watch today:

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Analyst Upgrades: QUALCOMM, Inc., Netflix, Inc., and The Walt Disney Company

Analysts upwardly revised their ratings on QCOM, NFLX, and DIS

by 4/17/2014 9:22 AM
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Analysts are weighing in today on digital communications expert QUALCOMM, Inc. (NASDAQ:QCOM), streaming content provider Netflix, Inc. (NASDAQ:NFLX), and entertainment heavyweight The Walt Disney Company (NYSE:DIS). Here's a quick roundup of today's bullish brokerage notes.

  • Stifel lifted its price target on QCOM to $83 from $80 this morning, as the shares have advanced nearly 8% in 2014 to trade at $80.18. Options activity on QUALCOMM, Inc. has been relatively bullish recently, as well. The equity sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.07, with calls bought to open outnumbering puts by a margin of 5-to-1. What's more, this ratio ranks just 2 percentage points from a 12-month peak, pointing to a near-annual-high rate of call buying, relative to put buying, during the past two weeks. Looking ahead, QCOM will report fiscal second-quarter earnings after next Wednesday's close.

  • NFLX -- which will head into the earnings confessional Monday evening -- saw its stock's rating upgraded to "outperform" from "sector perform" at Pacific Crest earlier today. Ahead of the quarterly event, Netflix, Inc.'s short-term option traders are trading calls over puts at an annual-high rate, as the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.77 ranks the lowest of all other comparable readings taken during the past year. This may come as a surprise, considering NFLX shares are down 27.6% from their March 6 record high of $458 to trade at $331.41.

  • Overnight, Evercore upped its price target on DIS to $85 from $80, ahead of the company's Investor Day at ESPN this afternoon. On the charts, The Walt Disney Company has had a slow first half of the month, currently sitting just 1.4% below its month-to-date flat line, at $78.95. Regardless, the brokerage bunch has handed out 13 "buy" or better endorsements on the stock, compared to nine "holds" and not a single "sell" suggestion. Furthermore, the average 12-month price target among analysts comes in at $82.52, denoting a slight premium to the shares' current price.

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The New Face of Big-Cap Technology

Checking in on the price action of the VXN versus the VIX

by 4/17/2014 7:29 AM
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If you spent the first three-and-a-half months of 2014 in a cave well, first of all welcome back! We knew you were away, so we decided to make sure that SPDR S&P 500 ETF (SPY) didn't move much for you. It's up 0.8% in 2014 nothing to see here, move along.

Okay, of course I kid. I mean, who spends time in a cave in order to avoid watching the market anyway? It's a lazy way for me to say, "Hey, we're moving around a lot and going absolutely nowhere."

But alas, we're only not moving in an S&P 500 Index (SPX)-centered world; small-caps and momentum stocks and Nazz names are all over the place.

We noted a couple weeks ago how Nasdaq volatility has exploded on a relative basis versus S&P 500 volatility. And since then, the relative pop has gotten even more extreme. Here's the CBOE NASDAQ 100 Volatility (VXN) (the VIX of the Nazz) vs. the CBOE Volatility Index (VIX) over the past year. (Click on the charts to enlarge.)

Daily chart of VXN versus VIX Since April 2013

The ratio keeps figuratively jumping off the charts. It's the highest level since very early 2007.

VXN versus VIX Since 2001

It's important to remember that the nature of big-cap tech has changed over the years. Back in 2001, the typical bigger-tech name was some combo of newly listed, relatively small versus the Exxon Mobil Corporations (NYSE:XOM) of the world and/or much more volatile than the typical big-tech names today.

As time went on, some of the biggest Nazz names turned up as some of the biggest names overall. And they behaved just like regular, non-volatile large stocks. The volatility of the Nazz overall converged towards the volatility of the S&P 500.

Long story short, this is a pretty spectacular divergence we're seeing right now. This isn't 2001 bubbly tech taking a tumble.

The 10-day realized volatility (RV) in PowerShares QQQ Trust (QQQ) hit 27 earlier this week. That's not historically enormous, but it's the highest reading since December 2011. The 10-Day RV in SPY has lifted lately, too, but "only" to 17 -- a level it's hit probably 20 times since December 2011.

I'd like to make some grand-macro call based on all this, but it's not so simple. The ratio spiked from 1.12 to 1.65 over the course of 2006, then peaked almost exactly on New Year's Eve. The market as a whole then got shaky and would ultimately peak in a big way in October 2007. So, by that sample size of one, it suggests the market tops out 1-1.5 years from now. That sounds like a somewhat realistic timetable but again, that's based on squinting at a pattern that happened once.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

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Options Check-Up: Nokia Corporation (ADR), Sirius XM Holdings Inc., and DuPont

Analyzing recent option activity for NOK, SIRI, and DD

by 4/16/2014 5:05 PM
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Among the stocks attracting attention from options traders lately are telecom specialist Nokia Corporation (ADR) (NYSE:NOK), streaming music provider Sirius XM Holdings Inc. (NASDAQ:SIRI), and diversified science and tech concern E I Du Pont De Nemours and Co (NYSE:DD), otherwise known as DuPont. Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on NOK, SIRI, and DD

  • Although NOK is down about 10% year-to-date to trade at $7.30, the stock sports a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.55, with calls bought to open more than quadrupling puts. What's more, this ratio ranks in the 66th annual percentile, indicating the recent rate of call buying, relative to put buying, is faster than usual. Meanwhile, good news for short-term option bettors -- Nokia Corporation's (ADR) Schaeffer's Volatility Index (SVI) of 48% ranks just 7 percentage points from a 12-month low, meaning prices on short-term contracts are nearing annual-low levels, from a volatility perspective.

  • SIRI -- which has shed more than 7% over the past month to trade at $3.17 -- has been popular with option bulls of late. In fact, the equity's top-heavy 10-day ISE/CBOE/PHLX call/put volume ratio of 9.04 ranks higher than 77% of comparable readings from the past year, signifying bullish bets have been placed over bearish at an accelerated rate during the past two weeks. However, it is possible that puts have been relatively unpopular due to the limited profit potential on a downside move. Whatever the case may be, Sirius XM Holdings Inc.'s short-term options are more expensive now than they have been all year, relatively speaking, as the stock's SVI of 44% ranks in the 100th annual percentile.

  • Finally, DD option players have bought to open puts, relative to calls, at a quicker-than-usual speed recently, with the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.63 ranking in the 67th annual percentile. Short-term options on E I Du Pont De Nemours and Co remain at a relatively decent price, as evidenced by the fact that the equity's SVI of 19% ranks in the 46th percentile of its 12-month range. Meanwhile, on the charts, DD shares are positioned about 36% higher on a year-over-year basis to trade at $67.72. Looking ahead, the company's first-quarter earnings report will hit the Street tomorrow morning.

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Stocks to Watch Thursday: Alcoa Inc, Halliburton Company, and AOL, Inc.

Analyzing AA, HAL, and AOL ahead of tomorrow's trading

by 4/16/2014 4:40 PM
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Momentum names that made notable moves on Wednesday and could continue to do so into Thursday's session include aluminum producer Alcoa Inc (NYSE:AA), oil-and-gas concern Halliburton Company (NYSE:HAL), and Internet issue AOL, Inc. (NYSE:AOL). Here is a quick look at these stocks ahead of tomorrow's opening bell.

Alcoa Inc (NYSE:AA)

Alcoa scored a fresh two-year high of $13.44 today, before closing the session with a 2.8% gain at $13.42. The stock has been on the up-and-up for the past three trading days now, adding about 7% to its value during this time period. Stepping back even further, AA has outperformed the broader S&P 500 Index (SPX) by more than 49 percentage points during the past six months -- so it may come as a surprise that AA's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.00 ranks the highest of all similar readings from the past year. This indicates that speculators have bought to open puts, relative to calls, at an annual-high rate during the past two weeks. Widening the time frame to 10 weeks shows a similar trend, as AA's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.55 also ranks above all other readings taken in the past year. With that being said, a continuation of Alcoa Inc's upward trajectory may cause bearish bettors to hit the exits, which could give the shares an additional boost.

Halliburton Company (NYSE:HAL)

Halliburton explored record-high territory at $60.74 earlier today, after receiving a $5 price-target lift to $60 at Morgan Stanley. Although the stock fell slightly below this technical milestone by the end of the session, it still finished 0.9% above breakeven, at $60.50. Option players responded enthusiastically today, as call volume more than tripled the typical amount traded in one session. What's more, eight of the 10 most active options of the day were short-term calls, and at the top of the list was the May 62.50 strike, where more than one-fourth of HAL's total options volume crossed. On the fundamental front, HAL is scheduled to report first-quarter earnings before next Monday's open.


AOL spent its second consecutive day in the green, after announcing a "new premium video experience" for its home page. Today, the stock jumped 4.4% to $44.36, marking a two-day uptick of 6.6%. Subsequently, calls changed hands at a rate that nearly doubled the average norm, with the four most active options being of the soon-to-expire front-month variety. Considering short interest accounts for 8.1% of AOL's available float, perhaps some of today's call activity can be attributed to short sellers hedging against additional upside.

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