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Option Clips: Microsoft Corporation, Citigroup Inc, and Cree, Inc.

Reviewing notable options activity on Microsoft Corporation, Citigroup Inc, and Cree, Inc.

by 6/13/2014 2:33 PM
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Three names seeing notable option activity today amid developing news and/or unusual price action are tech titan Microsoft Corporation (NASDAQ:MSFT), financial firm Citigroup Inc (NYSE:C), and LED issue Cree, Inc. (NASDAQ:CREE). Here's a look at how today's option traders have been placing their bets on these three names.

  • Microsoft Corporation (NASDAQ:MSFT) is 1.7% higher at $41.28, thanks to a halo lift from sector peer Intel Corporation (NASDAQ:INTC). What's more, options traders are rolling the dice on more upside for MSFT, with intraday call volume running at three times the normal pace. Short-term options are gaining traction, as the equity's 30-day at-the-money (ATM) implied volatility (IV) has jumped 4.8% to 15.4%. Digging deeper, bulls appear to be buying to open the June 41.50 call -- the most active contract thus far -- amid hopes for MSFT to finish atop $41.50 next Friday, when front-month options expire. Slightly more aggressive, longer-term bulls, meanwhile, are buying to open the August 43 call, which will move into the money if MSFT surmounts $43 -- a feat not accomplished since April 2000.

  • Citigroup Inc (NYSE:C) is 1.6% lower at $47.49, amid reports the U.S. government is asking for more than $10 billion to settle an investigation into the company's mortgage practices. C options are flying off the shelves at three times the typical intraday rate, and the stock's 30-day ATM IV has popped 8.7% to 18.5%. It appears bullish holdouts are picking up the equity's July 50 call, where IV has edged 1.1 percentage points higher and the majority of the contracts traded on the ask side, hinting at buy-to-open action. By purchasing the round-number calls to open, the buyers expect C to muscle back atop the mid-century mark by the close on Friday, July 18, when the back-month options expire.

  • Finally, Cree, Inc. (NASDAQ:CREE) has jumped 3.8% to $49.09, in what Trade-Alert attributes to renewed takeover rumors. Whatever the motive, CREE's short-term options are in demand, as evidenced by the stock's 30-day ATM IV, up 18.7% at 34.8%. The security has seen roughly 36,000 calls change hands already today -- nine times the norm, and about eight times the number of puts traded. CREE's weekly 6/13 48.50-strike call and July 52.50 call have garnered the most attention, with volume exceeding open interest at both strikes, hinting at new initiations. Plus, more than two-thirds of the calls have traded on the ask side, suggesting they were bought. The weekly calls will expire in the money if CREE stays north of $48.50 through today's close, while the July-dated calls will be in the money if CREE topples $52.50 by July options expiration.


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