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Options Radar: Netflix, Inc., LinkedIn Corp, and TRW Automotive

Reviewing notable options activity on Netflix, Inc., LinkedIn Corp, and TRW Automotive Holdings Corp.

by 7/10/2014 1:13 PM
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Three names seeing notable option activity today are streaming video provider Netflix, Inc. (NASDAQ:NFLX), professional networking site LinkedIn Corp (NYSE:LNKD), and auto parts supplier TRW Automotive Holdings Corp. (NYSE:TRW). Here's a look at how today's option traders have been placing their bets on these three names.

  • Netflix, Inc. (NASDAQ:NFLX) is flirting with breakeven at $443 this afternoon, despite scoring 31 Emmy nominations for its original online programming. Speculators are placing bets on NFLX's end-of-week trajectory, with both eleventh-hour bulls and bears coming out of the woodwork today. Intraday options volume is running at twice the normal pace, with calls and puts neck and neck. Bulls are buying to open the weekly 7/11 445-strike call, amid hopes for NFLX to push past the $445 mark by tomorrow's close, when weekly options expire. Bears, meanwhile, are buying to open the weekly 7/11 430-strike put, which will move into the money if NFLX breaches $430 -- the stock traded as low as $428.20 today -- by the closing bell tomorrow. Despite the company's upcoming turn in the earnings confessional on Monday, July 21, NFLX's short-term options are attractively priced right now. The security's Schaeffer's Volatility Index (SVI) of 29% sits just 7 percentage points from an annual low, suggesting the equity's front-month contracts are relatively inexpensive.

  • LinkedIn Corp (NYSE:LNKD) is following the broader equities market into the red, down 1.2% at $157.60. Puts are trading at a faster-than-usual clip this afternoon, though much of the activity seems to be of the neutral-to-bullish variety. Specifically, it looks like traders are selling to open the weekly 7/11 150- and 152.50-strike puts. Should LNKD remain north of the strikes through tomorrow's close, the puts will remain out of the money, and the sellers can retain the entire premium received at initiation. Losses, meanwhile, will begin to mount should LNKD breach the strikes within the next session-and-a-half.

  • Finally, TRW Automotive Holdings Corp. (NYSE:TRW) skyrocketed to a record high of $101.98 -- and was halted twice -- and the auto parts concern just confirmed rumors of a buyout bid from Germany's ZF Friedrichshafen AG. The stock's 30-day at-the-money implied volatility soared 52.4% to 33.9%, reflecting the surging demand for short-term contracts, and calls are flying off the shelves at 67 times the usual pace. Speculators are circling the century mark, with buy-to-open activity at the July and October 100 calls, which are now in the money.


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