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Option Clips: Tesla Motors, Hewlett-Packard, and Bonanza Creek Energy

Reviewing notable options activity on Tesla Motors Inc, Hewlett-Packard Company, and Bonanza Creek Energy Inc

by 5/22/2014 2:00 PM
Stocks quoted in this article:

Three names seeing notable option activity today amid developing news and/or unusual price action are electric car maker Tesla Motors Inc (NASDAQ:TSLA), tech titan Hewlett-Packard Company (NYSE:HPQ), and oil-and-gas issue Bonanza Creek Energy Inc (NYSE:BCEI). Here's a look at how today's option traders have been placing their bets on these three names.

  • Tesla Motors Inc (NASDAQ:TSLA) is 2.9% higher at $205.27, despite accusations of bullying U.K. green energy firm Ecotricity. Option traders today are rolling the dice on more upside for TSLA through tomorrow's close, and are once again taking advantage of relatively low premiums. The stock's 30-day at-the-money implied volatility (IV) hit a 52-week low earlier in the session, but has since bounced back 0.9% to 40.1%. Meanwhile, intraday call volume is running at a 34% mark-up to the norm, with eleventh-hour bulls buying to open the weekly 5/23 205-strike calls -- the most popular option so far today. More than 10,300 contracts have traded at the soon-to-expire strike, a healthy portion of the calls crossed on the ask side, IV is 14 percentage points higher, and volume has surpassed open interest -- all signs of buy-to-open activity.

  • Hewlett-Packard Company (NYSE:HPQ) is up 1.4% at $32.98, just hours until its turn in the earnings confessional. Ahead of the event, overall options volume is running at five times the intraday norm, with about 57,000 calls and 26,000 puts exchanged. Digging deeper, it looks like one trader is growing more cautious ahead of earnings, rolling down 10,000 August 35 calls to the August 32 strike. Meanwhile, the International Securities Exchange (ISE) has detected sell-to-open activity at the weekly 5/23 34-strike call. By writing the calls to open, the sellers expect HPQ to remain south of $34 through tomorrow's close, when the options expire. In this best-case scenario, the calls will expire worthless, allowing the sellers to retain the entire net credit. Should HPQ extend its winning streak under the earnings spotlight, a rally could put the calls in the money, and the sellers at risk of assignment.

  • Finally, Bonanza Creek Energy Inc (NYSE:BCEI) has skyrocketed 14.2% to $52.39, after the firm announced plans to nearly double its stake in the Wattenberg gas field. The stock scored a subsequent price-target hike to $67 from $61 at Brean Capital LLC -- which estimated the aforementioned deal at roughly $224 million -- and BCEI options are flying off the shelves at seven times the average intraday pace. However, nearly twice as many puts as calls have crossed the tape thus far, with the June 50 put attracting the most attention. IV has edged 1.7 percentage points higher at the strike, volume has exceeded open interest, and more than two-thirds of the contracts traded on the ask side, suggesting buy-to-open activity. By purchasing the puts to open, the buyers either expect BCEI to backpedal beneath $50 by the close on Friday, June 20, when newly front-month options expire, or they're hedging their BCEI shares to lock in gains in the event of a pullback.
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