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Option Clips: Broadcom Corporation, Ariad Pharmaceuticals, and Google

Reviewing notable options activity on Broadcom Corporation, Ariad Pharmaceuticals, Inc., and Google Inc

by 6/2/2014 1:36 PM
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Three names seeing notable option activity today amid developing news and/or unusual price action are tech concern Broadcom Corporation (NASDAQ:BRCM), oncology issue Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), and Internet titan Google Inc (NASDAQ:GOOGL). Here's a look at how today's option traders have been placing their bets on these three names.

  • Broadcom Corporation (NASDAQ:BRCM) gapped higher this morning, after the firm announced plans to potentially sell its cellular baseband unit. The stock was last seen 10.1% higher at $35.10, after tagging an intraday peak of $36.05 out of the gate, and short-term options are in demand. The stock's 30-day at-the-money (ATM) implied volatility (IV) has rocketed 28.6% higher to 22.3%, and call volume is trading at seven times the intraday norm. Digging deeper, it appears option bulls are buying to open the weekly 6/6 34.50-strike calls, amid hopes for BRCM to extend its rally north of $34.50 through Friday's close, when the options expire. Slightly longer-term bulls, meanwhile, appear to be purchasing to open June 35 calls -- which expire at the close on Friday, June 20 -- where the majority of contracts have traded on the ask side, IV is 4.6 percentage points higher, and volume has surpassed open interest at the strike.

  • Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is 7.9% higher at $6.97, thanks to encouraging studies of its leukemia treatment, Iclusig. The equity's 30-day ATM IV is up 3.3% at 62.3%, and calls are flying off the shelves at four times the average intraday rate. The stock's June 8 call has seen close to 2,400 contracts change hands, primarily at the ask price, suggesting they were bought. Furthermore, IV at the strike is higher, and volume has exceeded open interest, hinting at fresh initiations. However, short interest accounts for nearly a quarter of ARIA's total available float, suggesting the out-of-the-money calls may have been purchased by short sellers looking for a short-term hedge.

  • Finally, Google Inc (NASDAQ:GOOGL) is down 1.7% at $561.74, amid reported disruptions in China ahead of the 25th anniversary of Tiananmen Square. (Separately, GOOGL is allegedly planning to pay roughly $1 billion to purchase satellites, in an effort to bolster global Internet access.) The security's 30-day ATM IV has shot 13.6% higher to 19.9%, reflecting a growing demand for short-term contracts. More specifically, puts are more popular than usual, trading at an 88% mark-up to GOOGL's average intraday pace. According to data from the International Securities Exchange (ISE), it looks like one speculator may have closed out a short put spread at the September 485 and 490 strikes. Meanwhile, "vanilla" bears have taken a shine to the weekly 6/6 550-strike put, gambling on a breach of $550 by Friday's close.
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