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The Home Depot, Inc. (HD): Data Breach Lures Option Bears

Bearish traders are focused on The Home Depot, Inc., following reports of stolen customer data

by 9/2/2014 3:09 PM
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The Home Depot, Inc. (NYSE:HD) is down 1.9% this afternoon to trade at $91.25, following reports of a massive data leak. Consequently, speculators are targeting puts at quadruple the typical intraday pace, with short-term contracts in focus -- based on the stock's 30-day at-the-money implied volatility, which has surged 21.6% to 15.8%.

Speaking of which, HD's most active option is the near-the-money weekly 9/5 91-strike put, where roughly 4,800 contracts have changed hands. These bearish bets are being bought to open at a volume-weighted average price (VWAP) of $0.42, as speculators wager on continued downside through the end of the week.

It's worth noting that at-expiration breakeven on the aforementioned puts -- $90.58, or the strike price less the VWAP -- has already been breached by HD on an intraday basis. Gains will accrue through the end of the week on a move all the way down to zero for the shares, while the most the traders can lose is the initial cash outlay, should the contracts expire out of the money.

Finally, in case you missed it, The Home Depot, Inc. (NYSE:HD) isn't the only company suffering from compromised customer data. In fact, Apple Inc. (NASDAQ:AAPL) is facing scrutiny today, after private photos of several female celebrities hit the Internet.


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Intel Corporation (INTC) Bulls Anticipate End-of-Week Rally

Traders gamble Intel Corporation will approach a decade-plus high this week

by 9/2/2014 2:24 PM
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Intel Corporation (NASDAQ:INTC) has been a long-term technical outperformer -- tacking on nearly 33% this year -- but is 1.2% lower at $34.49 this afternoon. This speed bump isn't deterring bullish bettors, however, as calls are running at double the usual pace at this point in the day. Also, INTC's 30-day at-the-money implied volatility (IV) has popped 10.3% to 19.6%, suggesting rising demand for short-term contracts.

Drilling deeper, option bulls are targeting the weekly 9/5 35-strike call, which is easily the most active INTC option today. By the numbers, 15,521 contracts are on the tape here, versus fewer than 6,500 for the next most active strike. With several mid-sized blocks crossing at the ask price, IV surging, and volume topping open interest, it's safe to assume fresh bullish bets are being initiated at a volume-weighted average price (VWAP) of $0.18.

In a nutshell, these speculators expect to see INTC above $35.18 (strike plus VWAP) -- two pennies shy of the stock's recent 12-year high -- at this Friday's close, when the weekly series expires. Gains will accumulate north of this breakeven mark, while potential losses are limited to the initial premium paid, in the event that the shares are perched below the strike at week's end.

While options traders are placing bullish wagers on Intel Corporation (NASDAQ:INTC), Wall Street is less convinced. Despite the equity's technical tenacity, half of the analysts following INTC have doled out "hold" or worse recommendations, and the security's average 12-month price target of $33.75 stands at a discount to the current share price. That said, if the stock resumes its uptrend in the near future, it could benefit from a round of upgrades and/or price-target hikes.


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Most Active Options Update: RF Micro Devices, Inc. (RFMD)

Bullish betting accelerates as RF Micro Devices, Inc. reaches higher heights

by 9/2/2014 1:47 PM
Stocks quoted in this article:

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 RF Micro Devices, Inc. (NASDAQ:RFMD), which is seeing call-buying activity amid a new multi-year peak.

Most Active Options Table

As alluded to, RF Micro Devices, Inc. is fresh off an 11-year high of $12.68, up 1.4% at $12.64, thanks to a positive article (subscription required) in a recent issue of Barron's. Not surprisingly, call volume has soared to four times the expected intraday volume, and short-term contracts are all the rage, as the stock's 30-day at-the-money implied volatility (IV) is 6.3% higher at 39.8%.

Most active is RFMD's October 14 call, where nearly 11,400 contracts are on the tape -- the majority of which traded as a pair of blocks totaling 10,000. Almost all of the contracts have crossed at the ask price, IV has popped, and volume outstrips open interest; plus, Trade-Alert confirms buy-to-open activity.

Based on the volume-weighted average price (VWAP) of $0.29, the speculators need RF Micro Devices, Inc. (NASDAQ:RFMD) to topple the breakeven mark of $14.29 (strike plus VWAP) by the close on Friday, Oct. 17, when back-month options expire. Gains are theoretically infinite north of here, while losses are capped at the initial premium paid, should the contracts expire out of the money.


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Options Radar: BlackBerry Ltd, Baidu Inc (ADR), and CONN'S, Inc.

Options are active today on BlackBerry Ltd, Baidu Inc (ADR), and CONN'S, Inc.

by 9/2/2014 12:50 PM
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Three stocks seeing notable options activity today are smartphone specialist BlackBerry Ltd (NASDAQ:BBRY), Internet search provider Baidu Inc (ADR) (NASDAQ:BIDU), and electronics retailer CONN'S, Inc. (NASDAQ:CONN). Here's a look at how today's options traders have been placing their bets on BBRY, BIDU, and CONN.

  • Roughly 31,000 BBRY calls have changed hands so far, more than doubling the stock's expected intraday volume. New positions are being opened at the September 11.50 call, where 4,728 contracts have traded -- and data from the International Securities Exchange (ISE) indicates a portion of the volume here was seller-initiated. By selling to open the September 11.50 call, traders are betting on BlackBerry Ltd to remain below this strike price through the next three weeks until front-month expiration. At last check, BBRY is up 1.9% at $10.38, after peaking at $10.52 earlier in the session.

  • Calls are also in heavy rotation on BIDU, with about 38,000 contracts exchanged so far -- easily outstripping the stock's average single-day volume of approximately 19,000 calls. Some of today's traders are betting on Baidu Inc (ADR) to rally through the end of this week, with buy-to-open activity detected at the weekly 9/5 225-strike call. BIDU has bounced 3.2% at last check to trade at $221.36, but hasn't moved above $225 since July 29.

  • CONN has tanked 29.8% to $31.47 -- and earlier hit a new annual low of $31.00 -- in the wake of a disappointing earnings report, and as a result, short selling on the stock has been temporarily restricted. Speculators are flooding the retailer's options pits instead, with 6,372 calls and about 10,000 puts on the tape -- representing five times the expected intraday volume for CONN'S, Inc. The newly in-the-money September 35 put is the most popular strike, with 2,564 contracts exchanged. Most of these puts have traded at the bid price, suggesting they were sold. In light of CONN's post-earnings plunge, some of this volume could be the result of bears taking profits on their winning bets.

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Most Active Options Update: Gilead Sciences, Inc. (GILD)

Bullish betting heats up as Gilead Sciences, Inc. hits record high

by 9/2/2014 12:24 PM
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 Gilead Sciences, Inc. (NASDAQ:GILD), which has seen a mix of call selling and buying.

Most Active Options Table

Gilead Sciences, Inc. is rallying early this afternoon, up 1.7% to trade at $109.39, after earlier hitting a fresh record high of $109.50. Sparking the upward move was a price-target hike to $125 from $115 at UBS.

In options land, the stock's 30-day at-the-money (ATM) implied volatility has spiked 11.1% to 33%, signaling elevated demand for short-term strikes. Calls are popular, outpacing puts by a greater than 3-to-1 margin.

Digging deeper, GILD's in-the-money November 100 call is seeing considerable action, with traders apparently securing profits by selling to close their positions. However, the most active option is the weekly 10/3 109-strike call, where roughly 5,000 contracts are on the tape. These now ATM calls are being bought to open at a volume-weighted average price (VWAP) of $3.83, signaling bullish expectations among short-term traders.

Specifically, the call buyers will profit if Gilead Sciences, Inc. (NASDAQ:GILD) is perched above $112.83 (strike plus VWAP) at the close on Friday, Oct. 3 -- when the weekly series expires. On the other hand, the most these option bulls stand to lose is the initial cash outlay, should the pharmaceutical stock close below the strike at expiration.


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