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Option Clips: Tiffany & Co., Netflix, Inc., and PHH Corporation

Reviewing notable options activity on Tiffany & Co., Netflix, Inc., and PHH Corporation

by 5/21/2014 12:52 PM
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Three names seeing notable option activity today amid developing news and/or unusual price action are upscale retailer Tiffany & Co. (NYSE:TIF), streaming content provider Netflix, Inc. (NASDAQ:NFLX), and mortgage services issue PHH Corporation (NYSE:PHH). Here's a look at how today's option traders have been placing their bets on these three names.

  • Tiffany & Co. (NYSE:TIF) is leading the broad-market rebound today, up 8.4% at $95.67, after earlier notching a fresh all-time high of $97.40. Overall options volume is running at seven times the average intraday rate, with roughly 12,000 calls and 8,000 puts exchanged. Options traders who gambled on a post-earnings lift for TIF weren't disappointed, after the company blew first-quarter expectations out of the water and raised its full-year forecast. More specifically, it looks like holders of the now in-the-money June 90 calls are cashing in their chips, selling to close their winning positions.

  • Netflix, Inc. (NASDAQ:NFLX) is flirting with a 2.9% lead at $382.25, after the firm disclosed plans to expand in Europe. Intraday options volume is running at a roughly 50% mark-up to the typical pace, with speculators employing both calls and puts to place neutral-to-bullish bets on NFLX's short-term trajectory. "Vanilla" bulls are apparently buying to open the weekly 5/23 380-strike call, where implied volatility (IV) has shot 5.2 percentage points higher and most of the contracts traded on the ask side. Meanwhile, other speculators are rolling the dice on short-term support at $375, by selling to open the weekly 5/23 375-strike put. The majority of the puts crossed on the bid side, IV is up 5.5 percentage points, and volume has outstripped open interest at the strike.

  • Finally, PHH Corporation (NYSE:PHH) has rallied 16.3% to $24.60, amid reports that Element Financial Corp is in talks to buy PHH's fleet leasing unit for about $1.35 billion in cash. Against this backdrop, the stock's 30-day at-the-money IV has rocketed 45% higher to 46.6%, reflecting a growing demand for short-term contracts. In fact, intraday call volume is running at 21 times the norm, and has more than doubled put volume thus far. Upon closer inspection, option bulls are eyeing the 25 strike, buying to open the June 25 and August 25 calls -- the two most active contracts at midday. The bulk of the calls have gone off at the ask price, IV has shot higher at both strikes, and volume at the front-month call exceeds open interest -- all signs of buy-to-open action. By purchasing the calls to open, the buyers expect PHH to be sitting north of $25 when the respective options expire.
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