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Option Clips: Las Vegas Sands Corp., Molycorp Inc, and PetSmart, Inc.

Reviewing notable options activity on Las Vegas Sands Corp., Molycorp Inc, and PetSmart, Inc.

by 3/3/2014 1:33 PM
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Two stocks generating buzz on StockTwits today are casino operator Las Vegas Sands Corp. (NYSE:LVS) and rare earths concern Molycorp Inc (NYSE:MCP). Additionally, PetSmart, Inc. (NASDAQ:PETM) is seeing unusual option activity ahead of its earnings report later this week. Here's a look at how today's option traders have been aligning their wagers on these three names.

  • Earlier today, Las Vegas Sands Corp. (NYSE:LVS) rose to a six-year peak of $86.25 on the heels of encouraging data out of Macau, but is now hovering just above breakeven at $85.38. Overall option volume is running at a 68% mark-up to typical intraday levels, with demand for calls easily trumping put orders. Meanwhile, 30-day at-the-money implied volatility (IV) has jumped 10.3%. Among the most active contracts is the weekly 3/7 85-strike put, which expires at the end of this week. Volume outpaces open interest, IV is higher, and a healthy portion has traded at the ask price, suggesting some buy-to-open activity.

  • Molycorp Inc (NYSE:MCP) is also bucking the broad-market trend lower, up 4.1% at $5.43 ahead of its turn in the earnings confessional tonight. The company is set to release its fourth-quarter results, and has a relatively rocky earnings track record of late, surprising to the upside in four of the last seven quarters, but issuing a negative surprise on three occasions. On average, the stock has lost almost 10.1% in the week subsequent to its earnings report. Still, call volume is running at three times the normal pace, with notable action at the April 6 strike. The lion's share of the nearly 3,600 contracts trading here crossed at the bid price, suggesting they may have been sold to open. On the put side, the weekly 3/7 5-strike put is garnering some attention; more than 5,500 contracts have changed hands, the majority of which traded at the ask price. Volume exceeds open interest at both of these strikes, indicating the presence of some opening orders.

  • PetSmart, Inc. (NASDAQ:PETM) is also seeing some earnings-inspired activity in its options pits. Call volume is currently running at 17 times what's typically seen in an average trading day, and most active is the March 70 call. More than 4,500 contracts have traded (versus open interest of 1,199), IV is higher, and over 80% of the trades went off at the ask price. In short, speculators appear to be scooping up long calls ahead of the retailer's earnings report on Wednesday morning. PETM has successfully topped analysts' estimates in the past seven quarters, and the stock has gained an average of 1.5% the day after earnings were issued. In three of the last four quarters, however, the shares have actually moved lower following the news. Currently, PETM is fractionally higher at $67.10.


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