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Option Clips: Synaptics, Netflix, Inc., and Qihoo 360 Technology

Reviewing notable options activity on Synaptics, Incorporated, Netflix, Inc., and Qihoo 360 Technology Co Ltd

by 5/28/2014 1:52 PM
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Three names seeing notable option activity today amid developing news and/or unusual price action are interface solutions provider Synaptics, Incorporated (NASDAQ:SYNA), streaming content concern Netflix, Inc. (NASDAQ:NFLX), and China-based Internet issue Qihoo 360 Technology Co Ltd (NYSE:QIHU). Here's a look at how today's option traders have been placing their bets on these three names.

  • Synaptics, Incorporated (NASDAQ:SYNA) has jumped 8.3% to $65.50, on reports the company is on the verge of buying chipmaker Renesas SP Drivers from Japan's Renesas Electronics Corp., after outbidding Apple Inc. (NASDAQ:AAPL). Against this backdrop, SYNA options are in demand -- especially the short-term variety, as the stock's 30-day at-the-money (ATM) implied volatility (IV) is 13.5% higher at 44%. Calls are the options of choice, with around 12,000 contracts exchanged -- 12 times the intraday average, and more than six times the number of SYNA puts exchanged. Digging deeper, bulls are targeting the now ATM June 65 call, where IV has shot 8 percentage points higher and most of the contracts traded on the ask side. More aggressive bulls, meanwhile, are apparently buying to open the June 70 call, amid expectations for SYNA to surmount the round-number mark -- and step into record-high territory -- by the close on Friday, June 20, when front-month options expire. However, considering short interest accounts for nearly 28% of the stock's float, it's possible the calls are being bought as short-term hedges.

  • Netflix, Inc. (NASDAQ:NFLX) is 1% higher at $403.00, a day after the company agreed to buy the home-video rights of Sony Corp's (ADR) (NYSE:SNE) animated films. While J.P. Morgan Securities strategists said now is an opportune time to buy calls on NFLX, puts are outpacing their rivals by a slim margin today -- though much of the action appears neutral-to-bullish in nature. The equity's 30-day ATM IV is up 0.7% at 37.6%, and the 10 most active options expire at Friday's close. Garnering notable attention are the weekly 5/30 390- and 395-strike puts, where the majority of contracts have crossed on the bid side, and IV is moving higher. Plus, volume exceeds open interest at both strikes, pointing to sell-to-open activity. By writing the puts to open, the sellers expect NFLX to remain north of the respective strikes through the end of the week, keeping the contracts out of the money and allowing them to pocket the initial premium received.

  • Finally, Qihoo 360 Technology Co Ltd (NYSE:QIHU) has bolted 6.3% higher to $95.60, after the firm reported stronger-than-expected first-quarter earnings. Intraday options volume is running at four times the norm, though calls outnumber puts by a 2-to-1 margin. Most active is the weekly 5/30 97-strike call, where more than 1,900 contracts have traded, primarily on the ask side. Furthermore, volume exceeds open interest at the soon-to-expire strike, suggesting the calls were bought to open. By purchasing the options, the buyers expect QIHU to extend its rally and settle north of $97 on Friday, when the options expire. However, short interest grew by nearly 38% during the past two reporting periods -- once again pointing to potential hedging activity among the bears.
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