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Option Clips: Yelp Inc, Starbucks Corporation, and Pandora Media Inc

Reviewing notable options activity on Yelp Inc, Starbucks Corporation, and Pandora Media Inc

by 2/26/2014 1:32 PM
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Two equities generating buzz on StockTwits today are review website Yelp Inc (NYSE:YELP) and coffee giant Starbucks Corporation (NASDAQ:SBUX). Streaming music provider Pandora Media Inc (NYSE:P), meanwhile, is also garnering notable attention in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Yelp Inc (NYSE:YELP) has more than quadrupled over the past year, and touched a record high of $98.86 earlier today. What's more, the equity's 30-day at-the-money implied volatility is up 2.4% at 53.4%, pointing to escalating demand for YELP's short-term options. Most of the focus has been on calls, with roughly 7,800 contracts exchanged -- a 26% mark-up to YELP's average intraday volume, and nearly twice the number of puts traded. Digging deeper, option traders are wagering on even higher highs for the stock this week, buying to open weekly 2/28 98-strike calls. At last check, YELP was trading at $98.15, a 3.6% gain from yesterday's close.

  • Starbucks Corporation (NASDAQ:SBUX) is up 1.5% at $71.59, but remains 8.7% lower on the year. In fact, the security is in danger of ending a second straight month beneath its formerly supportive 10-month moving average, which could now translate into resistance. Meanwhile, it seems some option players are rolling the dice on an extended descent for SBUX. Puts are once again the options of choice, with intraday volume at nearly twice the normal rate. More specifically, it appears one speculator bought to open a block of July 65 puts, which will move into the money if SBUX breaches $65 -- a level not explored since June -- within the next few months. Currently, delta on the puts rests at negative 0.23, implying a roughly 23% chance of the contracts finishing in the money at expiration.

  • Finally, Pandora Media Inc (NYSE:P) rallied to an all-time acme of $39.58 earlier today, despite an Albert Fried analyst calling a possible Microsoft Corporation (NASDAQ:MSFT) bid a "fairy tale." P calls are trading at a faster-than-usual clip today, with roughly 13,000 contracts exchanged -- a 66% mark-up to its average intraday volume, and nearly double the number of puts traded. While much of the volume has consisted of profit taking -- speculators are selling-to-close their in-the-money calls -- some short-term optimists are gambling on more upside for P, buying to open weekly 2/28 39.50-strike calls. In afternoon trading, P has pared its lead to 3.8% to flirt with $39.28.


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