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Active Options: Barnes & Noble, Inc., QUALCOMM, Inc., and Nike Inc

Reviewing notable options activity on Barnes & Noble, Inc., QUALCOMM, Inc., and Nike Inc

by 6/25/2014 1:48 PM
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Three names seeing notable option activity today are soon-to-split book behemoth Barnes & Noble, Inc. (NYSE:BKS), tech titan QUALCOMM, Inc. (NASDAQ:QCOM), and athletic giant Nike Inc (NYSE:NKE). Here's a look at how today's option traders have been placing their bets on these three names.

  • Barnes & Noble, Inc. (NYSE:BKS) is up 4.3% at $21.44, and earlier notched a fresh annual high of $22.75, after the firm announced plans to spin off its Nook business. Against this backdrop, intraday options volume is running at four times the typical pace, with traders employing both puts and calls to place neutral-to-bearish bets on BKS. Specifically, it appears speculators are selling to open the August 23 call. The sellers can retain the entire premium collected, should BKS remain south of $23 through the close on Friday, Aug. 15, when back-month options expire. Elsewhere, buy-to-open activity has been detected at the July 21 put. If the buyers are "vanilla," they're expecting BKS to backpedal south of $21 before the close on Friday, July 18, when the options expire. If they're BKS shareholders, they're looking to hedge against a short-term pullback, but their primary goal remains for the stock to extend its quest for new highs.

  • QUALCOMM, Inc. (NASDAQ:QCOM) is bucking the broad-market trend higher today, down 0.5% at $78.37. The stock has surrendered 1.9% so far this week, despite a favorable court ruling in Florida. Option traders are gambling on more downside for QCOM in the short term, with intraday put volume accelerated compared to normal levels. The stock's 30-day at-the-money (ATM) implied volatility (IV) has popped 8.4% to 20.8%, reflecting a growing demand for front-month contracts, and it appears speculators are buying to open the July 77.50 put. The puts will move into the money if QCOM breaches $77.50 -- a level not surrendered on a daily closing basis since mid-March -- by the close on Friday, July 18. Should the equity remain north of the strike, risk is capped at the initial premium paid for the puts. Despite today's 30-day ATM IV jump, QCOM's short-term options are relatively inexpensive; the stock's Schaeffer's Volatility Index (SVI) of 13% sits 4 percentage points from an annual low.

  • Finally, Nike Inc (NYSE:NKE) is 1.2% higher at $75.89, as traders cheer record-breaking World Cup viewership and wax optimistic ahead of tomorrow night's earnings report. The stock's 30-day ATM IV is 1% higher at 23.3%, and intraday options volume is running at roughly twice the average rate. It appears pre-earnings bulls are buying to open the weekly 6/27 78-strike call, amid expectations for NKE to surmount the strike -- a feat not accomplished since mid-March -- by the end of the week, when the options expire. A more cautious bull, perhaps, may have initiated a long call spread at the weekly 6/27 77- and 80-strike calls, for a net debit of $0.76 per pair of contracts. The strategist will profit if NKE is docked north of $77.76 (bought call strike plus net debit) at Friday's close, but his reward maxes out at $2.24 (difference between strikes minus net debit) no matter how high the stock should soar north of $80. Risk is limited to the initial net debit, should both calls expire worthless.


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