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Option Clips: Sirius XM Holdings, SunPower, and Chesapeake Energy

Reviewing notable options activity on Sirius XM Holdings Inc., SunPower Corporation, and Chesapeake Energy Corporation

by 6/12/2014 2:50 PM
Stocks quoted in this article:

Three names seeing notable option activity today are satellite radio provider Sirius XM Holdings Inc. (NASDAQ:SIRI), alternative energy concern SunPower Corporation (NASDAQ:SPWR), and oil-and-gas issue Chesapeake Energy Corporation (NYSE:CHK). Here's a look at how today's option traders have been placing their bets on these three names.

  • Sirius XM Holdings Inc. (NASDAQ:SIRI) is fractionally lower at $3.34, and it looks like one trader is gambling on limited upside through the remainder of the year. Intraday call volume is running at eight times the normal pace, with about 50,000 contracts exchanged -- compared to fewer than 600 puts. Nearly all of the action is attributable to a block of 48,400 December 3.50 calls, which traded for $0.23 apiece -- closer to the bid price at the time, suggesting they were sold. Assuming the calls were once again written to open, the seller expects SIRI to stay south of $3.50 through December options expiration, rendering the contracts worthless and allowing him to pocket the entire premium received from the sale. SIRI hasn't traded north of the strike since mid-March, but the seller's losses will accumulate if the stock topples this marker within the option's lifetime.

  • SunPower Corporation (NASDAQ:SPWR) is bucking the broad-market trend lower today, up 3% at $35.03, with solar stocks growing more attractive as crude oil prices skyrocket. What's more, short-term option traders are betting on more upside for SPWR through tomorrow's close. Intraday call volume is running at seven times the normal pace, with roughly 24,000 calls exchanged. Short-term options are in demand, as evidenced by the stock's 30-day at-the-money implied volatility (IV), up 2.2% at 45.8%. Specifically, the equity's weekly 6/13 35.50-strike call has garnered notable attention, with more than 2,500 contracts exchanged, primarily on the ask side. IV has edged higher, and volume trumps open interest at the strike, hinting at newly bought bullish bets. The calls will move into the money if SPWR muscles atop $35.50 by tomorrow's close, when the weekly options expire.

  • Finally, Chesapeake Energy Corporation (NYSE:CHK) is 1.6% higher at $30.52, and touched a two-year peak of $30.80 earlier, as the shares rally in step with black gold. Ahead of tomorrow's annual shareholder meeting, CHK options volume is accelerated, running at a 78% mark-up to its average intraday volume. The equity's June 30 call has seen a mix of buy- and sell-to-open activity, according to data from the International Securities Exchange (ISE). Meanwhile, it appears skeptics are buying to open the June 31 put, where volume has exceeded open interest and most of the contracts crossed on the ask side. By purchasing the puts to open, the buyers expect CHK to backpedal in the short term, and end south of $31 at the close on Friday, June 20, when the options expire.

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