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Option Clips: Zillow Inc, MannKind Corporation, and Staples, Inc.

Reviewing notable options activity on Zillow Inc, MannKind Corporation, and Staples, Inc.

by 3/19/2014 1:38 PM
Stocks quoted in this article:

Two equities generating buzz on StockTwits today are real estate website Zillow Inc (NASDAQ:Z) and biopharmaceutical concern MannKind Corporation (NASDAQ:MNKD). Meanwhile, office supplier Staples, Inc. (NASDAQ:SPLS) has also been active in the options pits. Here's a look at how traders have been aligning their speculative bets today.

  • Zillow Inc (NASDAQ:Z) is 3% higher at $96.61, after the firm launched a mortgage pre-approval tool for home shoppers. Overall, Z calls have traded at three times the typical intraday average, with roughly 7,100 contracts exchanged. Digging deeper, one options trader may be upping the bullish ante on Z, selling to close a batch of August 110 calls, and buying to open an equal amount of deeper out-of-the-money August 130 calls. On the other hand, the speculator could be a short seller increasing his "insurance policy." Short interest on Z jumped 15.5% during the most recent reporting period, and now represents nearly six sessions' worth of pent-up buying demand, at the equity's average pace of trading.

  • MannKind Corporation (NASDAQ:MNKD) is 7.6% higher at $6.08, and the stock's short-term options are in demand ahead of an April 1 FDA committee review of its diabetes treatment, Afrezza. In fact, MNKD's 30-day at-the-money implied volatility (IV) hit a new peak earlier today, and was last seen 3.3% higher at 277.9%. Option traders are taking sides on the equity, with puts running at twice the normal rate, and call volume trading at a 91% mark-up to the stock's average intraday pace. Garnering notable attention from buyers has been the weekly 4/11 5.50-strike put, where close to 2,400 contracts have traded, primarily at the ask price. Plus, IV on the option is 29 percentage points higher, and volume has surpassed open interest, underscoring our theory of fresh initiations. What's more, traders are willing to pay up for their short-term bets, as MNKD's Schaeffer's Volatility Index (SVI) of 268% sits just 1 percentage point from an annual climax.

  • Finally, Staples, Inc. (NASDAQ:SPLS) is fractionally higher at $11.44, and the stock has seen roughly 19,000 calls change hands -- seven times the norm. For comparison, fewer than 250 SPLS puts have traded thus far. The April 12 call is once again in focus, accounting for nearly 16,600 of the contracts exchanged. Most of the calls changed hands on the ask side, including a block of 9,000 contracts traded right out of the gate. Plus, IV is trending higher at the strike, and volume has surpassed open interest, suggesting buy-to-open activity. In order for the calls to be in the money at expiration, SPLS would have to ascend 4.9% from its current perch to topple the $12 level -- in territory not charted since before the stock's earnings-induced bear gap on March 6.


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