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Chicago Bridge & Iron Company N.V. (CBI) Traders See More Downside

Chicago Bridge & Iron Company N.V. (CBI) is on the short-sale restricted list

by 1/30/2015 3:00 PM
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Chicago Bridge & Iron Company N.V. (NYSE:CBI) is down 11.4% this afternoon to hover near $34.10, after announcing a project to build a pair of nuclear plants in Georgia has been delayed 18 months. As a result, the shares skimmed a three-year low of $32.16 earlier, and found a place on the short-sale restricted list. Meanwhile, puts are flying off the shelves at 12 times the expected intraday pace.

Diving deeper, buy-to-open activity is detected at the March 25 and 30 puts, which are CBI's two most active options, with more than 15,000 total contracts on the tape. In other words, these speculators anticipate the shares will breach the respective strikes by the close on Friday, March 20, when the back-month options expire.

Elsewhere on the Street, short sellers are likely cheering Chicago Bridge & Iron Company N.V.'s (NYSE:CBI) retreat. During the most recent reporting period, short interest swelled 20%, and now makes up 7.3% of the equity's total float.


Option Bear Exits as Chevron Corporation (CVX) Tests $100

A big block of Chevron Corporation (CVX) puts was sold to close earlier

by 1/30/2015 2:53 PM
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Chevron Corporation (NYSE:CVX) is among the biggest Dow decliners this afternoon, off 2% to trade at $100.94, after posting its lowest quarterly profit since 2009 -- though per-share earnings did top estimates -- and halting its 2015 share buyback program. Earlier, in fact, the stock tanked to $98.88, marking its first foray into double-digit territory in more than two years. As such, puts are crossing the tape at nearly three times the usual intraday rate, and outstrip calls by a healthy margin.

Digging deeper, it appears one speculator is closing out his bearish position. Specifically, a block of 1,708 March 100 puts was sold to close around lunchtime, according to data from the International Securities Exchange (ISE). In other words, the trader is taking his skeptical bet off the table, with the stock now sitting just above $100 -- perhaps satisfied with his gains, and concerned the round-number century mark may act as support as it did in mid-December.

Take a step back, put buying has been the strategy of choice among recent CVX options traders. The stock's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 1.54 -- just 11 percentage points from a 12-month peak.

In other news, sector peer Occidental Petroleum Corporation (NYSE:OXY) is rallying this afternoon, amid crude oil's 8% rebound and a day after its CEO took a shot at Chevron Corporation (NYSE:CVX). Specifically, during a conference call, the executive was asked whether his company may be acquired by one of its larger rivals -- to which he quipped, "I looked at Chevron and they don't have any free cash." To counter, CVX CEO John Watson said the company is "actively screening [M&A] opportunities ... and we'll take advantage of opportunities that we see."


Hewlett-Packard Company (HPQ) Option Bulls Keep the Faith

Hewlett-Packard Company (HPQ) calls are trading at nearly two times the average intraday pace

by 1/30/2015 2:24 PM
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Hewlett-Packard Company (NYSE:HPQ) is down 3.3% today to linger near $36.51, amid broad-market headwinds. Options traders are keeping the faith, though, with calls crossing the tape at a rate 1.7 times the intraday average, and outpacing puts by a nearly 3-to-1 ratio.

Drilling down, buy-to-open activity has been detected at HPQ's February 39 and March 38 calls, as speculators roll the dice on HPQ to bounce back above the strike prices within the options' respective lifetimes. Delta on the front-month call is docked at 0.15, and 0.37 for the back-month call, indicating a respective 15% and 37% chance the calls will be in the money at expiration.

Widening the sentiment scope reveals options players have been more bearishly biased in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, HPQ's 50-day put/call volume ratio of 0.84 ranks in the 97th annual percentile. In other words, puts have been bought to open over calls with more rapidity just 3% of the time within the past year.

Given HPQ's long-term technical prowess, a portion of the recent put buying may have been a result of shareholders protecting paper profits against any unexpected downside. In fact, not only has Hewlett-Packard Company (NYSE:HPQ) tacked on 36% over the last 52 weeks, but the stock hit a three-year high of $41.10 just three weeks ago.

Weekly Chart of HPQ Since January 2014


MannKind Corporation (MNKD) Gains Have Calls Running Hot

MannKind Corporation (MNKD) calls have seen seen tons of action in the past two weeks

by 1/30/2015 2:10 PM
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Calls have been the options of choice among MannKind Corporation (NASDAQ:MNKD) speculators of late. Specifically, during the past 10 sessions, traders have bought to open nearly 12 calls for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The biopharmaceutical company's resulting 10-day call/put volume ratio across these exchanges comes in at 11.75 -- higher than 88% of all such readings from the past year.

Reinforcing this preference for calls over puts is MNKD's Schaeffer's put/call open interest ratio (SOIR) of 0.32, which is just 3 percentage points from an annual low. In other words, call open interest roughly triples put open interest, among options expiring in the next three months.

However, it should be noted that some of this activity could be the result of short sellers protecting their bets, as close to 30% of the security's float is sold short. It would take over three weeks for short sellers to buy back these positions, at the stock's average pace of trading.

While MannKind Corporation (NASDAQ:MNKD) has added over 17% in the past 52 weeks, it's struggled of late. Since touching a multi-year high of $11.48 on June 30, the shares have dropped 44.5%, but were last seen 1.4% higher at $6.37.


Option Traders Eye Lower Lows for Eldorado Gold Corporation (EGO)

Eldorado Gold Corp (USA) (EGO) bears are buying puts amid the stock's plunge

by 1/30/2015 1:41 PM
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Mining concern Eldorado Gold Corp (USA) (NYSE:EGO) is swimming in red ink this afternoon, landing on the short-sale restricted list. With the shares down 21.4% at $4.38 -- and just off a six-year low of $4.29 -- bears are flooding the options pits. In fact, intraday put volume is running at eight times the average pace, with speculators betting on even lower lows for EGO.

Specifically, short-term traders are apparently buying to open the February 4 put, which will move into the money if EGO breaches $4 -- territory not charted since November 2008 -- by the close on Friday, Feb. 20, when front-month options expire. Less aggressive bears are buying to open the March and July 5-strike puts, gambling on EGO to extend its retreat south of $5 through the options' respective lifetimes.

Today's plunge was triggered by unfavorable comments from the newly empowered left-wing Greek government, after former-Communist-turned-Syriza-party-leader Panagiotis Lafazanis said the administration is "absolutely against" EGO's gold mine project in the country. However, even before today's drop, EGO option traders were bearishly tilted.

On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 0.12 stands higher than 73% of all other readings from the past year, reflecting a growing appetite for bearish bets over bullish. Likewise, Eldorado Gold Corp's (NYSE:EGO) Schaeffer's put/call open interest ratio (SOIR) of 0.45 registers in the 92nd percentile of its annual range, suggesting short-term traders are more put-heavy than usual.


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