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Option Clips: Qihoo 360 Technology, Zynga, and LinkedIn

Reviewing notable options activity on Qihoo 360 Technology Co Ltd, Zynga Inc, and LinkedIn Corp

by 5/7/2014 1:25 PM
Stocks quoted in this article:

One equity generating buzz on StockTwits today is Chinese Internet concern Qihoo 360 Technology Co Ltd (NYSE:QIHU). Meanwhile, social networking peers Zynga Inc (NASDAQ:ZNGA) and LinkedIn Corp (NYSE:LNKD) are also popular in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Qihoo 360 Technology Co Ltd (NYSE:QIHU) is 6.9% lower at $77.77, as Internet stocks continue to tumble and traders digest the IPO valuation of fellow China-based Internet firm Alibaba Group. Nevertheless, although QIHU has been placed on the short-sale restricted list, options players remain upbeat, with intraday call volume running at three times the norm. Speculators have taken a shine to short-term contracts, as the stock's 30-day at-the-money (ATM) implied volatility (IV) is 8.1% higher at 68.2%. Digging deeper, QIHU's out-of-the-money June 90 and 97.50 calls are most popular, with the majority of the contracts traded at the ask price, suggesting they were bought. Plus, volume has surpassed open interest at the round-number strike, and IV is 6.3 percentage points higher at the 97.50-strike call -- both signs of new positions. In order for the calls to move into the money, QIHU would need to rebound roughly 16% and 25%, respectively, by the close on Friday, June 20, when back-month options expire.

  • Zynga Inc (NASDAQ:ZNGA) is 6.5% lower at $3.48, swooning in sympathy with sector peer King Digital Entertainment PLC (NYSE:KING), which is flirting with a post-IPO low after its inaugural earnings report. ZNGA put volume is running at twice the intraday norm, with roughly 20,000 contracts exchanged so far. The 3.50 strike is popular among short-term put traders, and the majority of the May and June 3.50 puts traded have done so on the bid side, hinting at seller-driven volume. The International Securities Exchange (ISE) confirms that at a slim portion of the front-month puts were sold to open, and volume has exceeded open interest at the back-month put -- another sign of new positions. However, these puts are now in the money, so a healthy portion of the activity at these strikes likely consisted of profit taking.

  • Finally, LinkedIn Corp (NYSE:LNKD) hasn't been immune to sector headwinds, with the shares 2% lower at $139.40, after tagging a new annual low of $136.02 right out of the gate. Options players are rolling the dice on more short-term downside for the stock, with intraday put volume doubling the average rate. Furthermore, the equity's 30-day ATM IV is 3.1% higher at 48.1%, and the weekly 5/9 135-strike put has emerged as the favorite thus far. The majority of the puts traded on the ask side, volume has surpassed open interest, and IV is 11.7 percentage points higher, suggesting speculators are buying the puts to open. In other words, the buyers expect LNKD to extend its quest for new lows and breach $135 by Friday's close, when the options expire.

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