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Option Clips: BlackBerry Ltd, ConocoPhillips, and Apollo Education

Reviewing notable options activity on BlackBerry Ltd, ConocoPhillips, and Apollo Education Group Inc

by 3/31/2014 1:15 PM
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Three equities generating buzz on StockTwits today are smartphone maker BlackBerry Ltd (NASDAQ:BBRY), oil-and-gas concern ConocoPhillips (NYSE:COP), and University of Phoenix parent Apollo Education Group Inc (NASDAQ:APOL). Here's a look at how traders have been aligning their speculative bets today.

  • BlackBerry Ltd (NASDAQ:BBRY) has shed 2.5% to trade at $8.20, as analysts continue to weigh in on the company post-earnings. While a handful of brokerage firms offered upbeat opinions, Goldman Sachs and Credit Suisse slashed their respective price targets on the stock to $8.80 and $6. BBRY puts are in demand today, with volume running at six times the norm. While short-term contracts are hot -- the stock's 30-day at-the-money implied volatility is 6.4% higher at 59.9% -- much of the action transpired at two longer-term strikes. Specifically, it appears one speculator initiated a calendar spread by selling to open more than 24,000 September 7 puts, and buying to open an equal amount of January 2015 7-strike puts. The trader expects BBRY to remain north of $7 through September options expiration, but breach the strike before the LEAPS expire. BBRY hasn't traded south of $7 since late 2013, and maintains a 10% gain year-to-date. Plus, the stock's 14-day Relative Strength Index (RSI) sits at 35 -- in oversold territory, suggesting a rebound could be in the cards.

  • ConocoPhillips (NYSE:COP) is fractionally higher at $70.39, but remains just south of breakeven year-to-date. Nevertheless, one options trader expects the shares to muscle higher in the short term. Specifically, it looks like the speculator sold to close several thousand April 70 calls, and bought to open April 72.50 calls. By rolling his position up, the trader is banking on COP to rally north of $72.50 by the close on Thursday, April 17, when front-month options expire. The spread -- which consists of more than 26,000 contracts -- has accelerated intraday call volume to more than seven times the norm, with roughly 33,000 contracts exchanged.

  • Finally, Apollo Education Group Inc (NASDAQ:APOL) has added 4% to flirt with $34.16, as speculators jump in ahead of the company's turn in the earnings spotlight tomorrow night. The firm has exceeded the Street's bottom-line estimates in each of the past seven quarters, and averages a one-week post-earnings gain of 4.4%. Overall option volume is running at four times the typical rate, though calls are slightly more popular. The security's short-term contracts have grown increasingly expensive ahead of earnings, as the stock's Schaeffer's Volatility Index (SVI) has jumped from 50% on Tuesday, March 18, to its current perch of 64%. This reading stands higher than 63% of all others from the past year, suggesting short-term options are pricey right now, historically speaking. Meanwhile, just two of the 14 analysts following APOL consider it worthy of a "strong buy," and short interest represents two weeks' worth of pent-up buying demand, at the stock's average pace of trading, leaving the door wide open for potential post-earnings upgrades and/or a short squeeze in the wake of another pleasant earnings surprise.


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