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Options Radar: QUALCOMM, Inc., NVIDIA Corporation, and Transocean LTD

Notable options activity for QUALCOMM, Inc., NVIDIA Corporation, and Transocean LTD

by 8/7/2014 2:03 PM
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Three stocks seeing notable options activity today are CDMA specialist QUALCOMM, Inc. (NASDAQ:QCOM), PC chip provider NVIDIA Corporation (NASDAQ:NVDA), and offshore driller Transocean LTD (NYSE:RIG). Here's a look at how today's options traders have been placing their bets on QCOM, NVDA, and RIG.

  • Put volume has ramped up to nearly twice the average daily volume for QCOM, with roughly 31,000 contracts crossing the tape so far. Most active is the stock's January 2015 65-strike put, where 20,293 contracts have been exchanged. Nearly all of these puts traded at the ask price, and Trade-Alert indicates they may have been bought to close in order to limit losses. QUALCOMM, Inc. (NASDAQ:QCOM) traded as high as $81.97 on July 23, but a poorly received earnings report that night sent the stock reeling. Less than a week ago, in fact, one options trader bought to open a sizable batch of 65-strike puts, hinting at expectations for a continued drawdown. In today's session, QCOM is off 0.3% at $72.65.

  • NVDA options are active ahead of tonight's fiscal second-quarter earnings results, with about 30,000 puts and 12,000 calls changing hands so far -- roughly quadrupling the stock's expected intraday volume. With shares of NVIDIA Corporation (NASDAQ:NVDA) down 0.6% at $17.53, the two most active strikes are the August 19 put and the August 17 put. According to data from the International Securities Exchange (ISE), sell-to-close activity is taking place at the in-the-money August 19 put, while pre-event players are buying to open bearish bets at the August 17 strike. Currently, the options market is pricing in a post-earnings move of 8.5% for NVDA. Over the past eight quarters, the stock has averaged a one-day post-earnings gain of just 1.2%.

  • Call activity has surged today on RIG, with approximately 28,000 contracts exchanged so far. By contrast, the stock's average daily call volume totals just 5,523 contracts. Most of the action has taken place at the equity's September 42 call, where a block of 16,000 contracts traded at the ask price of $0.33. This transaction was tied to 272,000 Transocean LTD (NYSE:RIG) shares, representing 17% of the shares covered by the 16,000 calls -- a ratio exactly matching the option's delta at the time. With RIG hitting a new multi-year low of $38.04 earlier in today's session, it's possible a trader sold to open the September 42 calls, and assumed the delta risk via the share purchase to obtain better pricing on the options. At last check, RIG is up 0.3% at $38.26, recovering from its earlier lows in the wake of last night's earnings report.


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