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Options Radar: Netflix, GT Advanced Technologies, and Twitter Inc

Reviewing notable options activity on Netflix, Inc., GT Advanced Technologies Inc, and Twitter Inc

by 7/1/2014 11:10 AM
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Three names seeing notable option activity this morning are streaming content provider Netflix, Inc. (NASDAQ:NFLX), solar technology firm GT Advanced Technologies Inc (NASDAQ:GTAT), and microblogging giant Twitter Inc (NYSE:TWTR). Here's a look at how today's option traders have been placing their bets on these three names.

  • Netflix, Inc. (NASDAQ:NFLX) is up 5.8% at $465.97, and earlier notched a new record high of $466.50, thanks to a pre-market upgrade at Goldman Sachs. Intraday option volume is running at three times the usual clip, with traders showing an affinity for short-term contracts. The stock's 30-day at-the-money (ATM) implied volatility (IV) has edged 4.2% higher to 51.8%, and nine of the 10 most active strikes expire at Thursday's close. It looks like some speculators are betting on a newfound floor at $460 for NFLX, selling to open the weekly 7/3 460-strike put. As long as the shares remain north of the strike through the end of the week, the puts will expire worthless and the sellers can pocket the initial premium received, which represents the maximum potential reward on the play.

  • GT Advanced Technologies Inc (NASDAQ:GTAT) is also on a mission for new highs, touching an all-time peak of $19.79 out of the gate. At last check, the shares are 4.8% higher at $19.50, and intraday call volume is running at three times the average rate. Furthermore, the equity's 30-day ATM IV has jumped 4% to 62%, and four of the five most active options are front-month calls -- a change of pace from yesterday. Specifically, traders may be buying to open July 19 and 20 calls, hoping GTAT extends its quest for new highs over the next three weeks. Elsewhere, short sellers may be hitting the exits in the wake of GTAT's ascent. Short interest accounts for more than one-third of the stock's total available float, representing nearly seven sessions' worth of pent-up buying demand, at the security's average pace of trading.

  • Finally, Twitter Inc (NYSE:TWTR) is 4.4% higher at $42.77, after the firm named former Goldman Sachs Group Inc (NYSE:GS) exec Anthony Noto the incumbent CFO. TWTR options are flying off the shelves, with overall volume running at twice the typical pace. The stock's 30-day ATM IV has soared 8.4% to 62.7%, and the 43 strike is in focus among the short-term trading crowd, with buy-to-open activity detected at the weekly 7/3 and July 43 calls. By purchasing the calls to open, the buyers expect TWTR to muscle north of $43 by the respective options expiration date. Should the stock remain south of the strike, the buyers will forfeit the initial premium paid -- which isn't much, on a historical basis. Despite today's ATM IV pop, TWTR's Schaeffer's Volatility Index (SVI) sits at an annual low of 38%, suggesting the equity's front-month options are inexpensive right now, from a volatility standpoint.


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