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Option Clips: Ariad Pharmaceuticals, Liquidity Services, and Gogo

Reviewing notable options activity on Ariad Pharmaceuticals, Inc., Liquidity Services, Inc., and Gogo Inc

by 4/2/2014 1:19 PM
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Two equities generating buzz on StockTwits today are oncology concern Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) and online auction house Liquidity Services, Inc. (NASDAQ:LQDT). In-flight connectivity provider Gogo Inc (NASDAQ:GOGO), meanwhile, is also attracting attention in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) -- which just appointed a new senior vice president and chief business officer -- is 4.7% lower at $8.12. Nevertheless, intraday call volume is running at a 22% mark-up to its average, with more than 6,400 contracts exchanged. For comparison, fewer than 600 ARIA puts have traded thus far. The out-of-the-money May 10 call has garnered the most attention, with more than 2,200 contracts traded. More specifically, it appears speculators are buying the round-number calls to open, either to gamble on double-digit territory for ARIA, or to hedge their bearish bets against a short-term rally. Short interest represents nearly 24% of the stock's total available float.

  • Liquidity Services, Inc. (NASDAQ:LQDT) has plummeted 10.9% to $19.91, and earlier touched a two-year nadir of $19.36, as the company's winning bid for a Department of Defense contract left investors unimpressed. As such, the equity has landed on the short-sale restricted list, sending bears to the options pits instead. Put volume is running at eight times the intraday average, and traders are buying to open the April 17.50 put, on expectations that LQDT will breach the strike -- in territory not charted since March 2011 -- by the close on Thursday, April 17, when front-month options expire. What's more, LQDT's short-term options don't run cheap; the stock's Schaeffer's Volatility Index (SVI) sits at a 12-month high of 86%. From a broader sentiment standpoint, skepticism is nothing new for the shares, which have surrendered more than 12% in 2014. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.73 sits just 1 percentage point shy of an annual high, and it would take roughly 24 sessions to repurchase all of LQDT's shorted shares, at the security's average pace of trading.

  • Finally, Gogo Inc (NASDAQ:GOGO) is 4.7% higher at $22.42. The stock's 30-day at-the-money implied volatility (IV) has gained 4.8% to dock at 68%, with short-term contracts in demand ahead of Gogo's scheduled April 8 revelation of new in-flight technology. So far, around 22,000 calls have crossed the tape -- four times the norm, and eight times the number of GOGO puts traded. Speculators have taken a shine to the in-the-money 21 strike, with the April 21, May 21, and August 21 calls most popular. IV has soared on all three strikes, and the latter two strikes have seen volume exceed open interest -- all signs of new positions being initiated. Calls were already the options of choice among buyers, as the equity's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at a lofty 9.76.


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