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Option Clips: Five Below Inc, Twitter Inc, and Mattel, Inc.

Reviewing notable options activity on Five Below Inc, Twitter Inc, and Mattel, Inc.

by 3/26/2014 1:34 PM
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Two equities generating buzz on StockTwits today are tween retailer Five Below Inc (NASDAQ:FIVE) and microblogging site Twitter Inc (NYSE:TWTR). Meanwhile, toy maker Mattel, Inc. (NASDAQ:MAT) is also seeing unusual action in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Five Below Inc (NASDAQ:FIVE) has advanced 12.9% to flirt with $42.91, after the company last night reported solid fourth-quarter earnings. Against this backdrop, overall options volume is running at 17 times the intraday norm, especially on the put side of the tape. Digging deeper, it appears some speculators are trying to call a short-term top to FIVE's rally, buying to open the April 45 put. No fewer than four brokerage firms upped their price targets in the wake of the report, and short sellers could also be hitting the exits. Short interest accounts for 22.2% of FIVE's total available float, representing nearly 13 sessions' worth of pent-up buying demand, at the stock's average daily trading volume.

  • Twitter Inc (NYSE:TWTR) is 3.1% lower at $46.38, after the company said it filed suit against Turkey over the government's pre-election ban of the site. The security's put options are trading at an 11% mark-up to the average intraday rate, with roughly 24,000 contracts exchanged. Meanwhile, the equity's 30-day at-the-money (ATM) implied volatility (IV) is 8.4% higher at 57.9%, pointing to rising demand for TWTR's short-term contracts. The most popular put is the weekly 3/28 47 strike, where more than 2,700 contracts have changed hands, with a slight skew toward the ask price. Plus, volume has exceeded open interest at the strike, hinting at new bearish bets. By purchasing the puts to open, the buyers expect TWTR to extend its retreat south of $47 through Friday's close, when the options expire.

  • Finally, Mattel, Inc. (NASDAQ:MAT) is following the broader equities market into the black, up 1.8% at $39.45. However, options traders are gambling on a pullback for the shares, with puts trading at 44 times the normal pace. Furthermore, the stock's 30-day ATM IV is 21.5% higher at 29.4%, suggesting short-term options are growing increasingly popular. Most active thus far is the May 40 put, where more than 6,250 contracts have changed hands. Eighty-nine percent of the puts traded at the ask, IV is 1.6 percentage points higher, and volume has outstripped open interest -- all signs of newly bought bearish bets. Likewise, more aggressive skeptics are buying to open the April 38 put, with close to 4,900 contracts traded thus far.


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