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Options Radar: Electronic Arts Inc., GlaxoSmithKline, and Xilinx, Inc.

Reviewing notable options activity on Electronic Arts Inc., GlaxoSmithKline plc (ADR), and Xilinx, Inc.

by 7/23/2014 12:29 PM
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Three stocks seeing notable options activity today are video game issue Electronic Arts Inc. (NASDAQ:EA), pharmaceutical concern GlaxoSmithKline plc (ADR) (NYSE:GSK), and programmable device maker Xilinx, Inc. (NASDAQ:XLNX). Here's a look at how today's options traders have been placing their bets on these three names.

  • Electronic Arts Inc. (NASDAQ:EA) is down 4.8% today at $36.56, despite posting a fiscal first-quarter earnings beat last night, and being met with nine price-target hikes (compared to just one reduction). According to sources, the downturn can be attributed to the company's plans to delay the release of its highly anticipated title, Battlefield: Hardline. Meanwhile, options activity has really picked up, with 14,000 contracts on the tape compared to an expected intraday volume of fewer than 3,700. In particular, short-term traders are buying to open EA's weekly 7/25 38.50-strike call, anticipating the shares will recover by week's end.

  • GlaxoSmithKline plc (ADR) (NYSE:GSK) has shed 5.1% this afternoon to trade at $50.49, due to the firm's poor showing in the earnings confessional this morning, as well as a price-target cut from S&P Capital IQ. Consequently, puts are flying off the shelves, at 31 times their typical intraday clip. GSK's most active strike so far is the out-of-the-money November 50 put, largely thanks to a 1,300-contract lot that was exchanged near the bid price, for $1.85 each. With volume outstripping open interest at the strike, it's safe to assume new positions are being created.

  • Lastly, Xilinx, Inc. (NASDAQ:XLNX) plummeted to an annual low of $39.12 earlier, and was last seen down 14.4% at $41.23. Sparking the sell-off was last night's fiscal first-quarter top-line miss and weaker-than-expected current-quarter sales guidance, coupled with a barrage of price-target cuts from no fewer than nine analysts. In fact, XLNX landed on the short-sale restrict (SSR) list right out of the gate this morning. Not surprisingly, traders have taken to the options pits, where volume is running at 20 times the usual intraday amount, and the stock's 30-day at-the-money implied volatility has spiked 10.4% to 25.8%, suggesting elevated demand for short-term contracts. However, the most active XLNX option is the longer-term December 42 call, where 6,108 contracts have changed hands against just 19 contracts in open interest -- indicating freshly placed bets. A considerable chunk of that volume crossed in early trading as a trio of sweeps; they did so at or near the bid price at the time.


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