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Options Radar: ARM Holdings, FuelCell Energy, and MGM Resorts

Reviewing notable options activity on ARM Holdings plc (ADR), FuelCell Energy Inc, and MGM Resorts International

by 7/22/2014 11:51 AM
Stocks quoted in this article:

Three stocks seeing notable option activity today are microprocessing expert ARM Holdings plc (ADR) (NASDAQ:ARMH), fuel cell company FuelCell Energy Inc (NASDAQ:FCEL), and casino heavyweight MGM Resorts International (NYSE:MGM). Here's a look at how today's option traders have been placing their bets on these three names.

  • ARM Holdings plc (ADR) (NASDAQ:ARMH) is cruising higher as we near midday, up 5.5% to wink at the $44.92 level. Spurring the rally was the company's second-quarter earnings beat and upbeat backlog outlook, announced this morning. In the options pits, volume is running at six times the average intraday rate, with traders targeting ARMH's August 46 call. Though it's not fully clear, this could be buy-to-open activity, as short-term bulls attempt to place their bets on the relative cheap, as implied volatility at the strike has taken a post-earnings dive of 11.8%. Meanwhile, others are apparently selling to open the August 42 put, anticipating the shares will remain above $42 through August options expiration.

  • FuelCell Energy Inc (NASDAQ:FCEL) gapped higher this morning, and was last seen up 12.7% to trade at $2.49, after reporting that its German affiliate has received a nearly 5-million-euro award from the German government. These developments have prompted a rush of options trading -- especially on the call side, where intraday volume is outpacing the expected volume by eight times. Short-term contracts are in demand, too, per FCEL's 30-day at-the-money (ATM) implied volatility (IV), which has risen 3.7% to 72.5%. Digging deeper, it appears speculators are buying- and selling-to-open the stock's January 2015 3-strike call.

  • Lastly, MGM Resorts International (NYSE:MGM) has put up a respectable 1.5% gain and now trades at $25.83. Against this backdrop, call volume triples the intraday average, and the gaming stock's 30-day ATM IV is up 1.9% to 33.8%, suggesting increased demand for front-month options. Along those lines, traders are buying to open MGM's August 26.50 call (per Trade-Alert), in the hopes that the equity will continue to muscle higher over the next month.


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