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Option Trends: Akamai Technologies, Inc. and Molycorp Inc

Options traders are scooping up calls on AKAM and MCP

by 7/16/2014 10:46:03 AM
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Options traders have set their sights on content delivery provider Akamai Technologies, Inc. (NASDAQ:AKAM) and rare-earths producer Molycorp Inc (NYSE:MCP), according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Calls have emerged as the options of choice on AKAM, and speculators are also skewing bullish on MCP.

Akamai Technologies, Inc. (NASDAQ:AKAM)

AKAM has racked up a 10-day call/put volume ratio of 8.59 on the ISE, CBOE, and PHLX. This ratio ranks higher than 95% of comparable readings taken over the past 52 weeks, as speculative players have rarely shown a greater preference for bullish bets over bearish.

Likewise, Schaeffer's put/call open interest ratio (SOIR) for AKAM weighs in at 0.56, with calls nearly doubling puts among options set to expire within three months. The stock's current SOIR ranks in the 14th annual percentile, which means short-term options players have been more call-heavy just 14% of the time.

AKAM has added a solid 26.4% year-to-date to trade at $59.59. However, the shares have struggled throughout 2014 to surmount resistance in the $61-$63 region.

Traders may be expecting a bullish breakout from Akamai Technologies, Inc. (NASDAQ:AKAM) in the wake of its second-quarter earnings report, due out the evening of Wednesday, July 30. Looking back over the company's last eight earnings announcements, the stock was trading higher one week later on five occasions, with the average gain totaling 16.7%.

Molycorp Inc (NYSE:MCP)

During the past 10 sessions, traders on the ISE, CBOE, and PHLX have bought to open 10.81 calls for every put on MCP. This reading registers in the 92nd annual percentile, as options players have purchased calls over puts at a faster clip only 8% of the time during the past 12 months.

Meanwhile, MCP's SOIR of 0.66 is docked at a 52-week low. In other words, short-term options players are showing a greater skew toward calls over puts now than at any other time in the last year.

However, it's worth noting that short interest accounts for a steep 34.5% of the stock's float. With so many bears betting on MCP to slide, it's possible that the recent uptick in buy-to-open call volume is related to hedging activity by short sellers.

Plus, MCP is down 69.5% year-over-year, and is trading at just $2.08 per share. As a result, there's relatively little profit potential for prospective put players -- so these bearishly slanted contracts may simply be less popular than usual among Molycorp Inc (NYSE:MCP) speculators.


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