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Option Clips: Google Inc, Buffalo Wild Wings, and Tesla Motors Inc

Reviewing notable options activity on Google Inc, Buffalo Wild Wings, and Tesla Motors Inc

by 6/23/2014 12:23 PM
Stocks quoted in this article:

Three names seeing notable option activity today are tech titan Google Inc (NASDAQ:GOOGL), restaurateur Buffalo Wild Wings (NASDAQ:BWLD), and electric automaker Tesla Motors Inc (NASDAQ:TSLA). Here's a look at how today's option traders have been placing their bets on these three names.

  • Google Inc (NASDAQ:GOOGL) -- the Nest Labs unit of which will reportedly drop about $555 million for camera startup Dropcam -- is up 0.4% at $568.89, but some options traders are rolling the dice on a short-term ceiling for the search giant. Intraday call volume is running at a 74% mark-up to the norm, with sell-to-open activity detected at the weekly 6/27 572.50-strike call -- the most active option thus far. By writing the calls to open, the sellers expect GOOGL to remain south of $572.50 -- an area that's been toppled just once on a daily closing basis since late March -- through Friday's close, when the options expire. In this best-case scenario, the calls will expire out of the money, allowing the sellers to retain the entire net credit. While the stock's 30-day at-the-money (ATM) implied volatility (IV) has jumped 4.5% today to 27%, now may not be the best time to exploit GOOGL's short-term option premiums. The security's Schaeffer's Volatility Index (SVI) of 31% sits just 1 percentage point from an annual low, implying the equity's front-month contracts are inexpensive, from a historical standpoint.

  • Buffalo Wild Wings (NASDAQ:BWLD) is 4.1% higher at $163.31, and earlier notched a new all-time peak of $164.26, after Wunderlich Securities reportedly reiterated the shares' "buy" rating, citing an expected boost from strong World Cup viewership. Against this backdrop, the stock's 30-day ATM IV has popped 10.5% to 26.4%, with intraday options volume running at eight times the norm. It appears speculators are either gambling on or hedging against a pullback for BWLD in the short term, buying to open the July 160 put -- the most active option by a landslide. If the buyers are "vanilla," their goal is for BWLD to backpedal beneath $160 through the close on Friday, July 18, when the newly front-month contracts expire. If the buyers are BWLD shareholders, their goal is for the stock to extend its quest for new highs; the protective puts merely lock in an acceptable price at which to hit the exits, should the security stage a retreat.

  • Finally, Tesla Motors Inc (NASDAQ:TSLA) is extending last week's advance, up 3.6% at $237.83, bringing its month-to-date gain to about 14.5%. Short-term options are in demand -- the stock's 30-day ATM IV is up 9.5% at 43.6% -- with intraday call volume running at twice the normal pace. In fact, six of the 10 most active options are calls expiring at Friday's close. Digging deeper, the weekly 6/27 230-, 235-, 237.50-, 240-, and 245-strike calls have all seen IV skyrocket by double digits, with a mix of buy- and sell-to-open activity detected at all five strikes. Meanwhile, the majority of out-of-the-money 6/27 250-strike calls appear to have been purchased to open -- possibly by short sellers seeking a short-term hedge. Short interest accounts for nearly 28% of TSLA's total available float, representing a week's worth of pent-up buying demand, at the stock's average daily trading volume.

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