Schaeffer's Trading Floor Blog

Bears Pounce After Iconix Brand Group, Inc. (ICON) CFO Resigns

Iconix Brand Group Inc (ICON) traders are buying May puts

by 3/31/2015 3:11 PM
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Iconix Brand Group Inc (NASDAQ:ICON) is 7.2% lower today at $33.77 -- putting the equity about 0.1% in the red year-to-date -- after the brand management firm announced the resignation of Chief Financial Officer Jeff Lupinacci. In light of this news, some speculators are betting on ICON to continue its downtrend, as put activity in the options pits is ramping up.

In afternoon action, puts are exchanging hands at 150 times the average daily rate. The day's most active contract by a landslide is the May 35 put, where buy-to-open activity has been uncovered. By purchasing this put, traders expect the security to continue its slide beneath the strike price through the close on Friday, May 15, when the option expires.

However, today's appetite for puts runs opposite the recent trend in the options pits. Before today, calls had been prominent, as ICON's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 9.47 stands in the 77th percentile of its annual range. Echoing this indicator is the security's Schaeffer's put/call open interest (SOIR) ratio of 0.26, which ranks lower than 80% of all equivalent readings taken over the past year. Simply stated, near-term traders are more call-heavy than usual.

Elsewhere, short sellers have taken a shine to Iconix Brand Group Inc (NASDAQ:ICON), as 33.4% of the stock's available float is sold short. What's more, it would take these speculators over four weeks to cover their bets, at average trading volumes. Against this backdrop, it's possible that some of the recent call buying could be attributable to shorts looking for a hedge. Meanwhile, the brokerage bunch is mostly bullish on ICON, as four out of five covering analysts rate the stock a "strong buy," with no "sell" or worse recommendations to be found.

Daily Chart of ICON Since October 2014

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Earnings Preview: Monsanto Company, CarMax, Inc., and Acuity Brands, Inc.

Analyzing recent option activity on Monsanto Company (MON), CarMax, Inc (KMX), and Acuity Brands, Inc. (AYI)

by 3/31/2015 12:56 PM
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Among the stocks gearing up to report earnings are agricultural specialist Monsanto Company (NYSE:MON), used car dealer CarMax, Inc (NYSE:KMX), and lighting solutions provider Acuity Brands, Inc. (NYSE:AYI). Below, we'll gauge the pre-earnings temperature of MON, KMX, and AYI.

  • MON has been a technical underperformer, with the shares down 5.4% year-to-date to linger near $112.97. What's more, Monsanto Company found itself in hot water last week after a troubling decision from the World Health Organization (WHO). Accordingly, sentiment in the options pits has been bearish, as MON's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.66 stands in the 98th percentile of its annual range. Meanwhile, in the session immediately following its last four earnings reports, MON has gained an average of 2.3%, including a 5.1% pop in June. Short-term options for the stock are available for relatively inflated premiums, as its Schaeffer's Volatility Index (SVI) of 23% is higher than 73% of all equivalent readings taken over the past year.

  • On the other hand, KMX has been a technical beast, with the shares notching a fresh all-time high of $69.52 earlier today, before cooling off a bit to $69.24 -- bringing its year-over-year gain to 45.8%. As such, call buying in the options pits has hit a yearly peak, as CarMax, Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 9.44 is the highest such reading taken over the past 12 months. KMX has been unpredictable in the earnings spotlight, with its last six quarterly reports sparking big one-day percentage moves -- ranging from a loss of 9.5% last September to a gain of 16.5% in June. Traders are paying middling prices for their short-term bets on the stock, as KMX's SVI of 42% ranks in the 52nd percentile of its annual range.

  • AYI has been trending higher as well, with the shares up 20.9% year-to-date to hit $169.28. Additionally, Acuity Brands, Inc. attained a new all-time high of $172.76 just yesterday. Puts have been popular in the options pits, as AYI's Schaeffer's put/call open interest ratio (SOIR) of 1.86 arrives in the 98th percentile of its annual range. Said another way, short-term speculators have rarely been this put-skewed on the security over the past 12 months. However, AYI doesn't usually drop after earnings; the stock has closed higher the day after seven of its last eight reports. Traders are paying fair prices for their near-term bets, as the security's SVI of 45% stands higher than 48% of all equivalent readings from the past year.

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Analyst Update: Kohl's Corporation, Skyworks Solutions, Inc., and Coronado Biosciences, Inc.

Analysts adjusted their ratings on Kohl's Corporation (KSS), Skyworks Solutions Inc (SWKS), and Coronado Biosciences Inc (CNDO)

by 3/31/2015 11:49 AM
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Analysts are weighing in today on retailer Kohl's Corporation (NYSE:KSS), semiconductor issue Skyworks Solutions Inc (NASDAQ:SWKS), and biotech firm Coronado Biosciences Inc (NASDASQ:CNDO). Here's a quick look at today's brokerage notes on KSS, SWKS, and CNDO.

  • KSS is up 2.7% to $78.68 -- and earlier touched a near-eight-year high of $78.80 -- after Sterne Agee raised its price target on the equity to $85 while keeping its "buy" rating. The hike comes as no surprise, considering the shares of Kohl's Corporation have advanced 28.9% year-to-date. Despite this impressive price action, short sellers have taken a shine to the stock, as short interest increased by about 9.7% over the past two reporting periods. As of right now, 12.07% of KSS' available float is sold short, which would take almost two weeks to cover, at average trading volumes. Should KSS extend its quest for new highs, a short squeeze could add fuel to the stock's fire.

  • Raymond James raised its price target on SWKS by $12 to $117 -- in uncharted territory. The stock is still feeling the effects of last week's sector-wide swoon, down 1.2% today to hit $98.97. Looking back, though, Skyworks Solutions Inc has been a technical juggernaut, with the shares up 163.1% year-over-year. In fact, the equity notched an all-time high of $102.77 just last week. However, sentiment in the options pits has been bearish, as SWKS's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.45 ranks higher than 88% of all equivalent readings taken over the past year. On the other hand, the brokerage bunch remains extremely bullish on SWKS, as 86% of covering analysts rate the security a "strong buy."

  • CNDO is up 17.5% to $4.16, after MLV & Co upgraded the stock to "buy" from "hold," while increasing its price target to $7 from $2. What's more, the brokerage firm said it expects Coronado Biosciences Inc's opioid drug, tramadol, to win regulatory approval as early as next year, and estimated the drug could generate $80 million in annual sales by 2018. On the charts, CNDO has been a technical outperformer of late, with the shares up about 70% year-to-date, and just off an annual high of $5.35, tagged earlier this month. However, puts have been prominent in the options pits, as CNDO's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.11 stands in the 80th percentile of its annual range. Simply stated, traders have been buying puts over calls at a faster-than-usual clip.

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Analyst Downgrades: Micron Technology, Inc., SanDisk Corporation, and Schlumberger Limited

Analysts downwardly revised their ratings on Micron Technology, Inc. (MU), SanDisk Corporation (SNDK), and Schlumberger Limited (SLB)

by 3/31/2015 9:23 AM
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Analysts are weighing in on semiconductor issue Micron Technology, Inc. (NASDAQ:MU), data solutions specialist SanDisk Corporation (NASDAQ:SNDK), and oil-and-gas concern Schlumberger Limited (NYSE:SLB). Here's a quick roundup of today's bearish brokerage notes on MU, SNDK, and SLB.

  • Wedbush cut its price target on MU by $5 to $35, but kept its "outperform" opinion, sending the shares down about 0.2% in electronic trading. On the charts, Micron Technology, Inc. has been sliding, down 32.6% since hitting a near-13-year high of $36.59 on Dec. 8, to close yesterday at $26.68. Accordingly, sentiment in the options pits has hit a pessimistic peak ahead of tomorrow's trip to the earnings confessional. Drilling down, MU's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.51 reads in the 100th percentile of its annual range. Simply stated, puts have never been bought to open over calls at a faster clip during the past year.

  • SNDK is 0.4% lower in pre-market trading, after RBC slashed its price target on the equity by $18 to $78, but reaffirmed its "outperform" rating. The price-target revision comes as little surprise, considering the shares of SanDisk Corporation have shed about 33.7% year-to-date to finish yesterday's session at $64.98. In fact, SNDK touched an annual low of $63.56 on Friday, as the stock gapped lower on disappointing guidance. Despite this weak performance of late, the brokerage bunch is still mostly bullish on the equity -- two-thirds of covering analysts rate the stock a "buy" or "strong buy," with no "sell" or worse recommendations to be found. Additionally, SNDK's consensus 12-month price target of $81.59 stands at a 25.6% premium to current trading levels, showing that more bearish brokerage attention could be on the horizon.

  • Wells Fargo weighed in on a number of oil-and-gas firms this morning, slashing its rating on SLB to "market perform" from "outperform." At last check, the shares of Schlumberger Limited -- which closed at $84.48 last night -- were following crude futures into the red, down 1.4% in electronic trading, and poised to steepen a 13.4% year-over-year deficit. Bears have been active in the options pits, as SLB's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.74 ranks higher than 91% of all equivalent readings taken over the past year. On the other hand, 74% of covering analysts rate the shares a "buy" or better, implying that a bullish mentality is still popular among the brokerage bunch.

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Buzz Stocks: Charter Communications, Inc., BioCryst Pharmaceuticals, Inc., and Lorillard, Inc.

Today's stocks to watch in the news include Charter Communications, Inc. (CHTR), BioCryst Pharmaceuticals, Inc. (BCRX), and Lorillard Inc. (LO)

by 3/31/2015 9:22 AM
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U.S. benchmarks are poised to pare a portion of yesterday's massive gains, with futures pointed lower on the last day of the first quarter. Among specific equities in focus are cable service provider Charter Communications, Inc. (NASDAQ:CHTR), drug developer BioCryst Pharmaceuticals, Inc. (NASDAQ:BCRX), and tobacco titan Lorillard Inc. (NYSE:LO).

  • M&A activity ruled the Street on Monday, and today it's CHTR in the spotlight. The company announced it will purchase Bright House Networks for roughly $10 billion. The deal will allow the latter's owner, Advance Newhouse, to become the former's biggest shareholder, and is contingent upon U.S. regulators approving the merger between Comcast Corporation (NASDAQ:CMCSA) and Time Warner Inc (NYSE:TWX). The news is being well-received, with shares of CHTR up 6.9% in electronic trading -- and headed for a fresh record high. Longer term, Charter Communications, Inc. has added 48.9% over the past 52 weeks, and settled last night at $183.39. In the options pits, long calls have been popular, per CHTR's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.37, which ranks in the 76th annual percentile.

  • BCRX is also signaling a strong start, with the shares 6.2% higher ahead of the bell. Stoking the buying power is news the firm landed a multi-million-dollar contract with the U.S. government to continue advancing possible treatments for various viral diseases, including Ebola. On the charts, the security has been making a series of lower lows throughout 2015 -- translating into a loss of 29.5% -- and closed Monday at $8.57. Against this backdrop, sentiment has been skewed toward the skeptical side. At the ISE, CBOE, and PHLX, BCRX's 10-day put/call volume ratio of 1.53 rests higher than 90% of all similar readings taken in the past year. Elsewhere, although short interest plunged 17% in the latest reporting period, it still accounts for a lofty 23.9% of BioCryst Pharmaceuticals, Inc.'s float.

  • LO is down 2.5% in pre-market trading, amid speculation the Federal Trade Commission (FTC) is looking to block the merger between the tobacco company and its peer Reynolds American, Inc. (NYSE:RAI). The reports are unconfirmed, and a meeting between LO, RAI, and federal regulators is rumored to be slated for this week. Since taking a sharp bounce off their 160-day moving average in mid-October, shares of LO have added 15.5% to trade at $66.42. However, today's projected price move could have the equity testing support atop its 80-day moving average. Options traders, meanwhile, have shown a preference for puts over calls among contracts expiring in three months or less. Specifically, Lorillard Inc.'s Schaeffer's put/call open interest ratio (SOIR) of 1.59 ranks in the 68th percentile of its annual range.

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