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Option Clips: Intel Corporation, Lululemon Athletica, and Chico's FAS

Reviewing notable options activity on Intel Corporation, Lululemon Athletica inc., and Chico's FAS, Inc.

by 4/3/2014 1:54 PM
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Two equities generating buzz on StockTwits today are tech concern Intel Corporation (NASDAQ:INTC) and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Retailer Chico's FAS, Inc. (NYSE:CHS), meanwhile, is also attracting attention in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Intel Corporation (NASDAQ:INTC) is 1.9% higher at $26.38, and is on pace for its loftiest close since mid-January. Off the charts, a company filing revealed that CEO Brian Krzanich's pay fell a year-over-year 40% in 2013, to $9.6 million. Overall call volume is running at four times the norm, with speculators showing an affinity for short-term contracts. In fact, the stock's 30-day at-the-money (ATM) implied volatility (IV) is 5.5% higher at 21.9%. Digging deeper, most of the action has transpired at the April 27 call, where a block of 40,000 contracts traded at 11:30 a.m. ET. If the calls were purchased, the buyer expects INTC to surmount $27 by the close on Thursday, April 17 -- just two days after Intel's next turn in the earnings spotlight -- when the options expire. If they were sold, the seller wants INTC to remain beneath the strike through options expiration, keeping the calls out of the money (OOTM) to pocket the initial premium received from the sale.

  • Lululemon Athletica inc. (NASDAQ:LULU) is 0.4% lower at $54.17, bringing its year-to-date deficit to 8.2%. Short sellers may be hedging their bearish bets against a short-term rebound, though, with intraday call volume at double the norm. More specifically, speculators are buying to open the April 60 call, where nearly 3,000 contracts have traded, primarily at the ask price. Plus, IV at the strike is 4.4 percentage points higher, and volume has exceeded open interest, underscoring our theory of newly purchased positions. Short interest on LULU represents more than eight sessions' worth of pent-up buying demand, at the security's average pace of trading, and the purchase of the OOTM calls would limit losses in the event of a surge north of $60 before front-month options expire.

  • Finally, Chico's FAS, Inc. (NYSE:CHS) is fractionally lower at $16.32. The equity's 30-day ATM IV is 3.4% higher at 25% -- reflecting a growing demand for short-term options -- yet it's a LEAPS contract that's garnered the most attention so far today. Overall call volume is running at 84 times the norm, with the January 2015 20-strike call accounting for nearly half of the 11,000 contracts traded. Earlier in the session, a block of nearly 4,900 of the calls crossed at the ask price, and volume has surpassed open interest at the strike, hinting at buy-to-open action. By purchasing the OOTM calls to open, the buyers expect CHS to be sitting north of $20 -- in territory not charted since mid-2007 -- when January 2015 options expire. Delta on the calls stands at 0.25, implying a roughly 1-in-4 shot of finishing in the money.


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