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Option Clips: Plug Power, Walter Energy, and Altria Group

Reviewing notable options activity on Plug Power Inc, Walter Energy, Inc., and Altria Group Inc

by 4/21/2014 1:03 PM
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Two equities generating buzz on StockTwits today are fuel cell systems supplier Plug Power Inc (NASDAQ:PLUG) and coal concern Walter Energy, Inc. (NYSE:WLT). Meanwhile, tobacco titan Altria Group Inc (NYSE:MO) is also seeing notable pre-earnings options action. Here's a look at how traders have been aligning their speculative bets today.

  • Despite an initial jump into the black, Plug Power Inc (NASDAQ:PLUG) is 4% lower at $7.03, after the firm announced a joint venture with South Korea's Hyundai Hysco Co Ltd. The equity's short-term options are in demand, as its 30-day at-the-money (ATM) implied volatility (IV) is 4.1% higher at 133.1%. Echoing that, overall options volume is running at more than double the average intraday rate, and the two most popular contracts expire at Friday's closing bell. Specifically, it appears option bulls are buying to open the weekly 4/25 8-strike call, while bears are purchasing to open the weekly 4/25 7-strike put. Although the shares of PLUG have more than quadrupled in 2014, the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.70 sits just 4 percentage points from an annual pessimistic peak. Likewise, just two analysts follow PLUG, and one maintains a tepid "hold" rating. Should PLUG resume its long-term uptrend, a mass exodus of option bears and/or a fresh wave of upbeat analyst attention could add contrarian fuel to the stock's fire.

  • Walter Energy, Inc. (NYSE:WLT) is 9.2% lower at $7.18 -- just a hair's breadth from its nine-year nadir of $7.07, tagged on March 20. Pressuring the equity was a downgrade to "sell" from "neutral" at Goldman Sachs, which also slashed its price target on WLT to $5 from $9. The shares of WLT are now on the short-sale restricted list, sending bears to the options pits instead. The equity's 30-day ATM IV is 14.9% higher at 85.4% -- showing a growing affinity for short-term contracts -- and overall options volume is running at twice the norm. "Vanilla" option bears may be buying to open the May 6 put, gambling on new multi-year lows for WLT, while neutral-to-bearish speculators are apparently selling to open the weekly 5/23 7.50-strike call, rolling the dice on a short-term ceiling at $7.50.

  • Finally, Altria Group Inc (NYSE:MO) is 0.4% lower at $38.29, dipping into the red for 2014, as speculators exercise caution ahead of the firm's turn in the earnings confessional Thursday morning. The security's 30-day ATM IV is 10.9% higher at 15.4%, though traders are showing a relatively rare preference for short-term puts over calls. Intraday put volume is running at four times the typical pace, with one skeptical speculator buying to open 9,000 weekly 5/9 37.50-strike puts. However, the stock's SOIR of 0.53 stands higher than just 9% of all other readings from the past year, suggesting short-term option players are more call-heavy than usual right now. Whatever the bias, MO's short-term contracts are still relatively inexpensive, as the security's Schaeffer's Volatility Index (SVI) of 14% ranks in the 31st percentile of its annual range.


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