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Traders Eye NVIDIA Corporation (NVDA) Earnings After Microchip Results

NVIDIA Corporation will report earnings after next Thursday's close

by 10/31/2014 2:53 PM
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Semiconductor stocks are in rally mode today, after Microchip Technology Inc. (NASDAQ:MCHP) said its third-quarter earnings were not as bad as initially projected -- and one name benefiting from the halo lift is NVIDIA Corporation (NASDAQ:NVDA). Specifically, NVDA was last seen 3.3% higher at $19.32, after earlier topping out at an intraday high of $19.49. With its own quarterly earnings slated for release after next Thursday's close, activity in the stock's options pits has hit fever pitch, with the contracts crossing the tape at a rate two times the intraday average.

Based on NVDA's 30-day at-the-money implied volatility (IV), which has jumped 5.8% to 41.6%, short-term contracts are in high demand. In fact, seven out of 10 of NVDA's most active options are of the weekly variety. Those betting on a post-earnings pop are buying to open the equity's weekly 11/7 20.50-strike and 11/14 19.50-strike calls, where a collective 4,200 contracts have changed hands.

Elsewhere, NVDA's most active put is the weekly 11/14 19 strike, where nearly all of the 2,329 contracts traded have done so at the ask price, indicating buyer-driven activity. IV has jumped 8.4 percentage points, and volume outstrips open interest, making it safe to assume new positions are being purchased. Delta for this put is docked at negative 0.42, suggesting a roughly 2-in-5 chance the option will be in the money at the close on Friday, Nov. 14 -- when the weekly series expires. For the sake of comparison, delta on the 11/7 20.50-strike call is 0.29, and 0.48 on the 11/14 19.50-strike call.

Recent history shows NVIDIA Corporation's (NASDAQ:NVDA) price action in the wake of reporting tends to side with bulls, as the stock has averaged a single-session post-earnings gain of 4.1% over the past four quarters. The options market is pricing in a 9.4% post-earnings move this time around, but considering the weekly 11/7 19.50-strike put and call are pricing in roughly equal implied volatilities (69.3% versus 69.4%), it's a toss-up as to which way the action is expected to resolve itself. Regardless, the most any group of option buyers has on the line is the initial premium paid.


Options Radar: Barrick Gold Corporation, Exxon Mobil, and Visa Inc

Reviewing notable options activity on Barrick Gold Corporation (USA), Exxon Mobil Corporation, and Visa Inc

by 10/31/2014 2:17 PM
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Three stocks seeing notable options activity today are precious metals producer Barrick Gold Corporation (USA) (NYSE:ABX), energy giant Exxon Mobil Corporation (NYSE:XOM), and credit card issue Visa Inc (NYSE:V). Here's a look at how today's options traders have been placing their bets on these three names.

  • Barrick Gold Corporation (USA) (NYSE:ABX) has tumbled 2% to trade at $12.04 -- and earlier hit another 20-plus-year low of $11.33 -- as gold sinks to its lowest level in four years. Also pressuring the shares is a price-target cut to $17 from $20 at Barclays, which underscored its "equal weight" rating. Conversely, Mackie Research upped its opinion of ABX to "hold" from "sell." In the options pits, intraday volume is running at roughly double the typical rate, and short-term contracts are in demand, per the equity's 30-day at-the-money (ATM) implied volatility (IV) -- up 7.9% to 38.8%. Digging deeper, ABX's December 13 call is seeing the most attention, largely thanks to a 10,000-contract block that crossed between the bid and ask prices, making it unclear whether the lot was sold or bought, respectively. Nevertheless, with fewer than 900 contracts in open interest here, it's safe to say the positions are being newly initiated.

  • Exxon Mobil Corporation (NYSE:XOM) is up 1.5% to hover near $95.83, on the heels of a third-quarter earnings beat, driven by improved performance in the company's refining and chemicals units. In options land, calls are crossing at faster than twice the expected intraday clip. Digging deeper, traders are eyeing the century mark, where opening activity is transpiring. Specifically, 13,062 contracts -- including a lot of 9,270 -- have changed hands at the December 100 call, dwarfing the 3,302 contracts in open interest. However, it's unclear whether these calls are being sold or bought, as the majority have been exchanged between the bid and ask prices.

  • Visa Inc (NYSE:V) has tacked on 1.3% to trade at $239.76, and earlier hit a record high of $242.50, as its post-earnings momentum continues. Meanwhile, options are trading at triple the expected intraday pace, and the stock's 30-day ATM IV has edged 0.6% higher to 17.2%, signaling elevated demand for short-term strikes. Speaking of which, the weekly 10/31 242.50-strike call is seeing buy-to-open activity, as eleventh-hour bulls bank on additional upside through today's close. Longer-term bears, by contrast, are buying to open V's ATM January 2015 240-strike put, which is the security's most active option.


Most Active Options Update: Bank of America Corp (BAC)

Bank of America Corp put player bets on a slow start to the new year

by 10/31/2014 1:50 PM
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The 20 stocks listed in the table below 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 financial firm Bank of America Corp (NYSE:BAC), where January puts are in focus.

Most Active Options Table

Bank of America Corp is following in the bullish footsteps of the broader equities market -- up 0.7% to trade at $17.15. This move higher -- which just echoes the stock's recent technical trajectory -- has prompted a number of speculators to sell to close their weekly 10/31 17-strike calls ahead of tonight's expiration.

Elsewhere in BAC's options pits, the January 2015 15-strike put has received notable attention, due to a large block of 15,000 contracts that changed hands earlier at the ask price of $0.15 apiece, suggesting they were bought. Implied volatility edged higher at the transaction, hinting at the possibility a fresh batch of bearish bets was initiated.

If this does represent buy-to-open activity, the speculator's profit will accrue on a move south of breakeven at $14.85 (strike less the premium paid). Losses, meanwhile, are limited to the initial cash outlay, should BAC maintain its perch atop the strike through January options expiration. For today's trader, specifically, this equates to $225,000 (number of contracts * 100 shares per contract * premium paid).

As indicated, though, Bank of America Corp (NYSE:BAC) has been on quite a roll of late. In fact, since taking a sharp bounce off its 120-day moving average in the session subsequent to reporting earnings, BAC has rallied more than 11%. What's more, the shares haven't traded south of $15 on an intraday basis since Aug. 8. Against this backdrop, delta on the aforementioned January put is currently docked at negative 0.13, indicating a slim 13% chance the option will be in the money at expiration.


Option Bulls Hungry for Yum! Brands, Inc. (YUM) Calls

Last-minute option bulls are buying to open Yum! Brands, Inc. calls

by 10/31/2014 12:13 PM
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Yum! Brands, Inc. (NYSE:YUM) has rallied 2.5% to trade at $71.75, fueled by rumors regarding a potential spinoff of the company's China-based business, according to Trade-Alert. What's more, options volume is exploding -- especially on the call side, where contracts are crossing at 11 times the expected intraday rate.

What's more, short-term strikes are in high demand, as YUM's 30-day at-the-money implied volatility has spiked 12.8% to 17.3%. In fact, eight of the 10 most active strikes expire within the next three weeks.

Digging deeper, eleventh-hour bulls are buying to open the equity's weekly 10/31 72-strike call for a volume-weighted average price (VWAP) of $0.35. With 5,240 contracts exchanged so far, this option is YUM's most active by a healthy margin. Long story short, these traders expect the underlying to be sitting atop breakeven at $72.35 (strike plus VWAP) at tonight's close, when the weekly series expires.

Meanwhile, slightly longer-term bulls are targeting the stock's December 75 call, where 2,773 contracts are on the tape. These buyers anticipate YUM will advance past $75 over the next seven weeks -- a mark that hasn't been toppled on a weekly closing basis since mid-July.

Looking at the charts, Yum! Brands, Inc. (NYSE:YUM) has moved little over the past three months, largely churning in the $66-to-$73 range. Longer term, the shares are down about 5% since the start of the calendar year.


Most Active Weekly Options: General Motors Company (GM)

Option bulls bet on General Motors Company to hurdle overhead resistance

by 10/31/2014 11:15 AM
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The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly 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 General Motors Company (NYSE:GM), where short-term option bulls have been busy .

Most Active Weekly Options Table

General Motors Company is following the broader market higher, so far adding 2.2% to trade at $31.45. Year-to-date, however, the shares are sitting on a 23% deficit, and have underperformed the broader S&P 500 Index (SPX) by nearly 11 percentage points during the past three months.

In the options pits, GM calls are crossing the tape at their usual intraday rate, yet roughly triple the number of puts traded. Most active is the weekly 11/7 32-strike call, where just over 5,900 contracts have changed hands. The vast majority have done so at the ask price, implied volatility (IV) has edged higher, and volume outstrips open interest -- collectively hinting at buy-to-open activity.

In short, these short-term call buyers expect General Motors Company (NYSE:GM) to topple $32 by next Friday's closing bell, when the weekly series expires. However, this strike -- which corresponds with the stock's descending 40-day moving average, as well as peak call open interest for the 11/7 series -- has presented a stubborn layer of technical resistance this month, stopping multiple rally attempts.


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