Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

VMware, Inc. (VMW) Option Traders Split

VMware, Inc. calls are being sold and bought to open today

by 9/22/2014 2:43 PM
Stocks quoted in this article:

VMware, Inc. (NYSE:VMW) has tacked on 3.2% this afternoon to churn near $97.12, amid buyout buzz surrounding EMC Corporation (NYSE:EMC) -- which owns a stake in VMW. Not surprisingly, VMW calls are the options of choice, trading at five times the usual intraday pace, and about four times the rate of puts. Short-term contracts are in high demand, too, per the stock's 30-day at-the-money implied volatility (IV), which has soared 18.9% to 29.4%.

The two most active VMW strikes are the October 105 and 100 calls. IV is trending higher at both strikes, suggesting new positions are being initiated. However, the majority of the contracts at the higher strike have crossed at the bid price -- suggesting they're being sold to open -- whereas the majority at the round-number 100 strike have been exchanged at the ask, indicating they're being bought to open. In short, the call sellers expect VMW to remain below $105 through the close on Friday, Oct. 17 -- when front-month options expire -- while the buyers anticipate the shares will topple the century mark during the same time frame.

Taking a step back, with today's rally, VMware, Inc. (NYSE:VMW) is sitting on a year-to-date lead of roughly 8%. Looking ahead, the company is tentatively slated to report earnings the week of Oct. 20 -- after the aforementioned options cease trading. Analysts are expecting a per-share profit of 83 cents from VMW, or a penny less than the firm's year-ago results.


Freeport-McMoRan Inc (FCX) Sell-Off Sparks a Rush of Option Volume

Freeport-McMoRan Inc option volume is trading at four times the intraday average

by 9/22/2014 2:21 PM
Stocks quoted in this article:

Freeport-McMoRan Inc (NYSE:FCX) has plunged 2.7% today to trade at $33.13, amid a sell-off in copper names ahead of tomorrow's highly anticipated manufacturing data out of China. In the stock's options pits, overall volume has soared to four times what's typically seen at this point in the day, and per the equity's 30-day at-the-money implied volatility (IV), which has surged 19.4% to 23.7%, short-term contracts are in high demand.

On the put side, the November 30 strike has garnered the most attention, with 26,544 contracts on the tape at last check. According to both Trade-Alert and the International Securities Exchange (ISE), this put is seeing buy-to-open activity, as traders bet on the stock to be perched south of the round-number $30 mark at the close on Friday, Nov. 21 -- when back-month options expire. This time frame encompasses the company's next turn in the earnings confessional, tentatively slated for the week of Oct. 20. However, over the past eight quarters, the security has averaged a single-session post-earnings gain of 1.1%.

Option bulls, meanwhile, are eyeing a quick rebound for shares of Freeport-McMoRan Inc (NYSE:FCX). Specifically, the weekly 9/26 34-strike call has seen 12,271 contracts change hands -- mostly at the ask price, hinting at buyer-driven activity. IV has shot 11.3 percentage points higher, and volume easily outstrips open interest, making it safe to assume new positions are being initiated. Delta on this call is docked at 0.21, suggesting a slim 21% chance the stock will be sitting north of $34 at Friday's close, when the weekly series expires.


Most Active Options Update: United States Steel Corporation (X)

One United States Steel Corporation put seller set a $3.5 million floor

by 9/22/2014 1:35 PM
Stocks quoted in this article:

The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is United States Steel Corporation (NYSE:X), where a longer-term put seller set a $3.5 million floor on the stock.

Most Active Options Table

Put volume is running at two times the average intraday pace on United States Steel Corporation (NYSE:X) this afternoon, although not all of the action is of the traditional bearish variety. Specifically, the stock's April 41 put has seen the most action, with 10,233 contracts on the tape thus far. The majority of these have gone off at the bid price, implied volatility is on the rise, and only 69 contracts currently make up open interest here -- all signs of sell-to-open activity.

The majority of the action at this out-of-the-money strike occurred when a large block of 8,952 puts was sold earlier at $3.90 apiece, resulting in a net credit of roughly $3.5 million (number of contracts * premium collected * 100 shares per contract). This is also the most the speculator stands to gain, should X maintain its foothold atop $41 through the close on Friday, April 17, when the options expire. Her losses, meanwhile, could be quite substantial, should the stock breach the strike price. However, with X last seen at $43.72, this put seller could also be hoping for assignment, and is using these options to gain an attractive entry price on the outperforming equity.

In fact, in 2014, United States Steel Corporation (NYSE:X) has rallied almost 48% to $43.53, and last week alone, the stock tacked on 13.2% following a number of fundamental developments and some bullish brokerage attention (which continued today with a price-target hike to $48 from $35 at Jefferies). Although the equity is trading lower in today's session, its 14-day Relative Strength Index (RSI) is docked at 74 -- in overbought territory -- suggesting a near-term pullback may have been in the cards.


Options Radar: EMC Corporation, The Clorox Co, and InvenSense Inc

Reviewing notable options activity on EMC Corporation, The Clorox Co, and InvenSense Inc

by 9/22/2014 12:58 PM
Stocks quoted in this article:

Three stocks seeing notable options activity today are tech issue EMC Corporation (NYSE:EMC), household product producer The Clorox Co (NYSE:CLX), and motion-sensor maker InvenSense Inc (NYSE:INVN). Here's a look at how options traders have been placing their bets on EMC, CLX, and INVN.

  • EMC Corporation (NYSE:EMC) tagged a 13-year peak of $30.16 earlier -- as traders digest a number of M&A rumors that surfaced over the weekend -- but was last seen lingering near $29.87. In the stock's options pits, call volume has soared to nine times the average intraday pace. EMC's 30-day at-the-money implied volatility, meanwhile, has jumped 21.7% to 23.4% -- in the 92nd percentile of its annual range -- signaling elevated demand for short-term contracts. Most active is EMC's October 31 call, which is seeing sell-to-open activity, although a portion of the volume may be tied to stock.

  • The Clorox Co (NYSE:CLX) notched its own notable milestone today -- hitting the $98.31 mark for the first time ever -- after saying it is shuttering operations in Venezuela due to the government's operating restrictions, as well as uncertain economic conditions. The company also reaffirmed its full-year fiscal 2015 guidance. At last check, though, shares were up 6.7% at $96.60, and call volume is running at 101 times what's typically seen at this point in the day. Option bulls are targeting even higher highs in the near term, with buy-to-open activity detected at CLX's January 2015 105-strike call.

  • InvenSense Inc (NYSE:INVN) is down 10.5% this afternoon to churn near $20.91, after Baird slashed its price target on the stock by $7 to $23, and cut its rating to "neutral" from "outperform," citing concern over the company's future for supplying parts to smartphone makers. As such, the security was placed on the short-sale restricted list, sending traders to the equity's options pits, as they look for alternative ways to bet bearishly on the stock. Specifically, INVN's October 25 put has seen the most action, and appears to be being bought to open for a volume-weighted average price of $3.55.


Bearing Betting Picks Up On Cisco Systems, Inc. (CSCO)

Weekly puts are being bought to open in Cisco Systems, Inc.'s options pits

by 9/22/2014 11:45 AM
Stocks quoted in this article:

Cisco Systems, Inc. (NASDAQ:CSCO) is off 1.3% around midday at $24.88, as the entire tech sector takes a beating. Of note, the tech-heavy Nasdaq Composite (COMP) is itself 1.3% lower. That said, options traders are targeting CSCO puts at triple the usual intraday pace, and interest is high in short-term strikes, per the equity's 30-day at-the-money implied volatility, which has risen 6.8% to 13.7%.

Diving into the details, the equity's most active option is the weekly 10/3 25-strike put, where close to 5,200 contracts are on the tape. Nearly all have crossed at the ask price, and volume outstrips open interest, suggesting the contracts are being bought to open -- a theory partially confirmed by data from the International Securities Exchange (ISE). In short, these buyers expect CSCO to continue its descent below $25 through Friday's closing bell, when the weekly options expire.

On a longer-term basis, Cisco Systems, Inc. (NASDAQ:CSCO) hasn't performed much better than it has today. Since this time last year, the stock has advanced a meager 2.5%, compared to the COMP's 20% gain.


Featured Brokers
Unusual Option Volume
Option Flow
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email:

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by | Data delayed 15-20 minutes unless otherwise indicated.