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Traders Split as Vimicro International Corporation (ADR) (VIMC) Soars

Vimicro International Corporation (ADR) option volume is trading at 12 times the intraday average

by 9/16/2014 3:11 PM
Stocks quoted in this article:

Vimicro International Corporation (ADR) (NASDAQ:VIMC) is on fire today, up 31% at $8.69 -- and earlier hit a seven-year peak of $9.38 -- after JL Warren Capital said the company could be poised to become a leader in China's video surveillance field. In the stock's options pits, overall volume has soared to 12 times what's typically seen at this point in the day. Short-term contracts are in high demand, per the equity's 30-day at-the-money implied volatility, which has jumped 29% to 128.2% -- in the 96th percentile of its annual range.

The four most active strikes target the equity's $7.50 level; specifically, the September 7.50 call and put, and the October 7.50 call and put, have garnered the most attention. The majority of the action at all four strikes has transpired on the ask side, and volume outstrips open interest -- making it safe to assume new positions are being initiated.

By buying to open the calls, traders expect VIMC to extend its lead past $7.50 through September and October options expiration, while those purchasing the puts are betting on the stock to retreat below this level in the near term. Delta on the front-month call -- which expires at this Friday's close -- is docked at 0.91, versus negative 0.17 for the front-month put. Meanwhile, delta on the back-month call, which expires at the close on Friday, Oct. 17, is 0.74, compared to negative 0.27 for the back-month put.

Longer term, shares of Vimicro International Corporation (ADR) (NASDAQ:VIMC) have risen 344% this year. Against this backdrop, option traders have bought to open 20.96 calls for every put over the past 50 sessions at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), and short interest accounts for less than 1% of the stock's available float.


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Options Radar: KB Home, Melco Crown Entertainment, Yingli Green Energy

Reviewing notable options activity on KB Home, Melco Crown Entertainment Ltd (ADR), and Yingli Green Energy Hold. Co. Ltd. (ADR)

by 9/16/2014 2:06 PM
Stocks quoted in this article:

Three stocks seeing notable options activity today are homebuilder KB Home (NYSE:KBH), gaming giant Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), and solar panel producer Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE). Here's a look at how today's options traders have been placing their bets on these three names.

  • KB Home (NYSE:KBH) is fractionally higher this afternoon at $16.86, yet options volume is exploding ahead of next Wednesday's early morning earnings report. Specifically, calls are crossing the tape at 10 times the usual intraday rate. Most active by far is the near-the-money October 17 call, where a multi-exchange sweep of 12,321 contracts traded just after 11 a.m. ET. It appears these calls are being sold to open, indicating an expectation for KBH shares to remain below $17 through the close on Friday, Oct. 17, when the back-month options expire. This theory is confirmed by Trade-Alert, which speculates the calls may be covered.

  • Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is swooning in sympathy with sector peer Las Vegas Sands Corp. (NYSE:LVS), off 3.6% to trade at $26.11. Earlier, in fact, MPEL shares hit a new annual low of $25.58. In the options pits, contracts are flying off the shelves at a rate four times the norm at this point in the day, and short-term contracts are in demand, per the stock's 30-day at-the-money implied volatility, which is up 3.7% to 36.3%. Despite MPEL's technical weakness -- year-to-date, the shares have lost one-third of their value -- traders today are betting on a rebound, buying to open the September 26 and January 2015 31-strike calls.

  • Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) is 0.6% lower this afternoon to hover near $3.50, bringing its 2014 deficit back beyond 30%. Not surprisingly, put volume is running at a faster-than-usual rate, with nearly 10,000 contracts on the tape -- compared to an expected full-day volume of 3,540 contracts. Digging deeper, bearish traders are active in YGE's options pits. The most active strike is the deep in-the-money October 7 put, which speculators are buying to open to wager on additional downside in the solar name.

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Can Ford Motor Company (F) Snap Its Weekly Losing Streak?

Ford Motor Company's September 16.50 call is being bought to open today

by 9/16/2014 2:04 PM
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Ford Motor Company (NYSE:F) has moved off its intraday lows, with the stock last seen 0.2% higher at $16.50. In the equity's options pits, call players are making a rare appearance, with volume running at a 17% mark-up to what's typically seen at this point in the day. Diving deeper reveals a number of option bulls are betting on the security to notch its first weekly win of the month.

Specifically, F's September 16.50 call has seen the most action today, with 4,951 contracts on the tape at last check. The majority of these went off on the ask side, implied volatility has edged higher, and volume outstrips open interest -- collectively pointing to buy-to-open activity.

These at-the-money calls are being purchased for a volume-weighted average price (VWAP) of $0.11, making breakeven at this Friday's close -- when front-month options expire -- $16.61 (strike plus VWAP). Profit will accrue north of here, while losses are limited to the initial premium paid, should F settle south of the strike at expiration.

On the charts, F has struggled recently, with the shares down 7% over the past two months. Additionally, the equity has lagged the broader S&P 500 Index (SPX) by more than 6 percentage points over this same time frame. Today, though, a sharp bounce off its 200-day moving average earlier helped Ford Motor Company (NYSE:F) move back above breakeven, and should the stock finish above $16.61 at Friday's close, it would mark the equity's first weekly win since Aug. 29.


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Most Active Options Update: J C Penney Company (JCP)

Options traders are targeting at-the-money J C Penney Company calls

by 9/16/2014 11:57 AM
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The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is J C Penney Company Inc (NYSE:JCP), which has seen heavy call-buying activity at one short-term strike.

Most Active Options Table

J C Penney Company is up 0.7% this afternoon to trade at $10.93, and option traders are betting the shares will soon make another push to topple the 11 strike. Specifically, the stock's weekly 10/10 11-strike call is in focus, with nearly 5,400 contracts on the tape so far. Over 90% have crossed at the ask price, and volume outstrips open interest, making it safe to assume the calls are being bought to open at a volume-weighted average price (VWAP) of $0.51.

Based on the above, at-expiration breakeven works out to $11.51 (strike plus VWAP), with theoretically infinite profit potential on a move higher in the underlying. Conversely, the speculators risk parting with the initial premium paid, should JCP finish below the strike at the close on Friday, Oct. 10, when the weekly series ceases trading.

Taking a step back, shares of the retailer have been struggling in the $11 area since late August. Some of this resistance may be due to the fact that the strike is home to peak call open interest in the September, weekly 9/26, and weekly 10/10 series of options. However, the options market is still giving the call about a 1-in-2 chance of an in-the-money finish, based on the delta of 0.51.

Honing in more closely on technicals, J C Penney Company (NYSE:JCP) has rallied nearly 20% in 2014, and has outperformed the broader S&P 500 Index (SPX) considerably in recent months. However, a rally north of $11.51 would represent a new year-to-date high for the stock, which hasn't topped $11.30 since the year began.


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Most Active Options Update: GT Advanced Technologies Inc (GTAT)

Put players pile on as GT Advanced Technologies Inc struggles

by 9/16/2014 10:58 AM
Stocks quoted in this article:

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is GT Advanced Technologies Inc (NASDAQ:GTAT), as option bears continue to target the struggling stock.

Most Active Options Table

It's been a terrible month for GT Advanced Technologies Inc (NASDAQ:GTAT), which has shed 34% since the start of September. These losses are accelerating today -- with the equity down 1.4% at $11.71 -- as GTAT continues to feel the sting of last week's Apple Inc. (NASDAQ:AAPL) snub. Against this backdrop, put volume has been picking up speed, as evidenced by the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.77, which ranks in the bearishly skewed 91st annual percentile.

It's a similar set-up in today's session, with puts trading at more than seven times the average intraday pace. Meanwhile, the equity's 30-day at-the-money implied volatility (IV) has shot 12.1% higher to 80.8% -- higher than 84% of similar readings taken in the past year -- signaling elevated demand for GTAT's short-term options.

Most active are the equity's October 12 and 17 puts, and it appears one speculator may be rolling down her bearish bets. Elsewhere, GTAT's weekly 10/3 10-strike put has received notable attention, where 6,147 contracts are on the tape. The majority of these have crossed on the ask side, IV is up 22.9 percentage points, and only 35 contracts are currently in residence here -- making it safe to assume new positions are being purchased.

The volume-weighted average price (VWAP) for the puts is $0.37, making breakeven at the close on Friday, Oct. 3 -- when the weekly series expires -- $9.63 (strike less VWAP), an area not seen by the stock since early February. Gains will accrue south of here, while losses are capped at the initial premium paid, should GT Advanced Technologies Inc (NASDAQ:GTAT) still be perched in double-digit territory at expiration.


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