Stocks quoted in this article:
Three names seeing notable option activity today amid developing news and/or unusual price action are biopharmaceutical name MannKind Corporation (NASDAQ:MNKD), computer hardware developer EMC Corporation (NYSE:EMC), and IT services concern Infoblox Inc (NYSE:BLOX). Here's a look at how today's option traders have been placing their bets on these three names.
- MannKind Corporation (NASDAQ:MNKD) tagged a new high of $9.46 earlier today, its highest point since January 2011. At last check, the shares were still sitting pretty, up 3.7% at $8.86. Despite its move to new highs, MNKD has been targeted by put traders today. In fact, put volume is running at 10 times the typical pace, with the heaviest attention focused on the out-of-the-money August 7 strike. Implied volatility (IV) has spiked at this strike, the majority of the puts have crossed on the ask side, and volume exceeds open interest, suggesting the puts are being purchased to open. Given the stock's year-to-date rally of nearly 71%, however, it's possible some of these out-of-the-money bets are the work of shareholders looking to protect their pre-existing stock position. Whatever the motive, it's a good time to purchase MNKD options premium. While the security's 30-day at-the-money (ATM) IV is up 18.3% at 81.3% today, its Schaeffer's Volatility Index (SVI) reading of 66% is just 2 percentage points shy of an annual low. In other words, short-term options are inexpensively priced, from a volatility perspective.
- Options players are taking advantage of low-priced options in EMC Corporation (NYSE:EMC), as the stock's 30-day ATM IV measure dropped to a new 52-week low earlier. Call volume has ramped up to quintuple what's seen on an average afternoon, and the lion's share of the action has crossed at three strikes. It looks as though one trader sold a July 26/27 call spread (6,607 contracts each) while simultaneously scooping up more than 13,000 July 28 calls. It is possible the spread is being sold to close, in favor of a more aggressively bullish long call position. With the stock trading at $26.53, the July 28 calls are out of the money by roughly 5.5% with seven weeks until expiration.
- Finally, Infoblox Inc (NYSE:BLOX) is having a terrible, horrible, no good, very bad day. The company reported a wider loss for its fiscal third quarter, and reduced its full-year outlook. Separately, company CEO Robert Thomas announced plans to leave his role. The stock has suffered a subsequent round of brokerage downgrades and has lost more than 40% today to $12.29 (after earlier pegging a new all-time low of $12.01). Also, an appearance on the short-sale restricted (SSR) list has sparked heightened interest among options players. Total intraday option volume is 43 times greater than what is seen on an average day, and it looks like some speculators are betting on a quick rebound in the shares. Most active is the June 12.50 call, which is seeing what appears to be buy-to-open activity.