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NVIDIA Corporation (NVDA) Traders Bank on a Quick Bounce

NVIDIA Corporation options traders are focusing on weekly calls today

by 10/21/2014 1:53 PM
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Short-term call traders are taking aim at NVIDIA Corporation (NASDAQ:NVDA) today, as call volume on the chip stock surges to roughly 18,000 contracts -- representing four times the usual intraday level. The most active option is NVDA's weekly 10/24 18-strike call, where 6,584 contracts have crossed the tape.

Most of these weekly options have traded near the ask price, and open interest at this strike totals just 2,137 contracts. In other words, it looks like speculative players are buying to open new bullish bets here today. By doing so, they're betting on NVDA to rally beyond $18 through the end of this week, when these calls are set to expire.

Shares of NVIDIA Corporation (NASDAQ:NVDA) have rallied 12.7% year-to-date, and they're up 2.8% this afternoon to trade at $18.06. However, there's a looming challenge overhead in the form of NVDA's 200-day moving average, currently docked at $18.23. This formerly supportive trendline was breached earlier this month, and could serve as an obstacle for the stock during the short term.


Options Radar: The Coca-Cola Company, Alibaba Group, and JDS Uniphase

Reviewing notable options activity on The Coca-Cola Company, Alibaba Group Holding Ltd, and JDS Uniphase Corp

by 10/21/2014 1:08 PM
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Option traders have taken a shine to blue chip The Coca-Cola Company (NYSE:KO), Chinese Internet issue Alibaba Group Holding Ltd (NYSE:BABA), and telecom tech concern JDS Uniphase Corp (NASDAQ:JDSU). Here's a look at how speculators have been placing their bets on KO, BABA, and JDSU today.

  • The Coca-Cola Company (NYSE:KO) has surrendered 6% to linger at $40.68, as the company's quarterly earnings fell flat. While today's earnings miss was likely much to the delight of recent option bears, some speculators today are gambling on a short-term rebound for KO. Intraday option volume is running at three times the normal pace, with buy-to-open activity detected at the weekly 10/31 40-strike call -- the most active strike thus far. Slightly longer-term bulls, meanwhile, are purchasing new positions at the weekly 11/7 45-strike call, amid hopes for KO to rebound -- and notch record highs -- by the close on Friday, Nov. 7, when the options expire.

  • Amid a tech-sector rally, Alibaba Group Holding Ltd (NYSE:BABA) has advanced 2.5% to trade at $90.50. The company today confirmed that it will unveil its inaugural public earnings report on Tuesday, Nov. 4, and options traders are scrambling to place their bets. The equity's 30-day at-the-money implied volatility is up 5.7% at 41.1%, and earlier notched an all-time peak, with intraday call volume running at nearly twice the typical pace. What's more, calls are outpacing puts by a roughly 3-to-1 margin, echoing the growing trend seen on the major options exchanges. Digging deeper, it looks like bulls are buying to open the November 90 call, expecting BABA to extend its climb north of the strike in the short term.

  • Finally, JDS Uniphase Corp (NASDAQ:JDSU) is also following the tech sector higher, up 2.5% at $12.29. What's more, the stock scored a bullish brokerage note from UBS, which lifted its price target by $3 to $17 and underscored a "buy" endorsement. Intraday options volume is running at twice the average rate, with buy-to-open activity spotted at the June 11 put. By purchasing the puts to open, the buyers expect JDSU to retreat beneath $11 -- territory not charted since early September -- over the next eight months. Looking ahead, JDSU is set to report fiscal first-quarter earnings after the close next Wednesday. In the wake of its last two trips to the earnings confessional, JDSU dropped 8.5% and 14.2% in the subsequent sessions.


Most Active Weekly Options: American Airlines Group Inc (AAL)

Short-term option bulls are taking aim at American Airlines Group Inc

by 10/21/2014 11:22 AM
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The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly 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 American Airlines Group Inc (NASDAQ:AAL), which has seen a surge in options volume.

Most Active Weekly Options Table

Airline stocks are flying high today, and American Airlines Group Inc is no exception. Shares of the Texas-based transportation company have rallied nearly 7% to trade at $37.65, and year-to-date, they're up roughly 49%.

Options traders have taken notice. In fact, intraday volume is running at double what's expected at this point in the session, and calls are tripling puts, 51,000 contracts to 17,000. Among weekly AAL options, the 11/7 37-strike call is leading the way, with 3,448 contracts on the tape. The vast majority have crossed at the ask price, implied volatility is edging higher, and volume tops open interest -- collectively pointing to buy-to-open activity. This theory is reiterated by Trade-Alert.

Thanks to today's massive rally, the weekly AAL options are now in the money. However, for the buyers to profit at expiration, the shares need to muscle north of $38.69 -- the strike plus the volume-weighted average price of $1.69 -- by the close on Friday, Nov. 7, a time frame that encompasses the company's earnings report, slated for release this Thursday morning. Historically, American Airlines Group Inc (NYSE:AAL) hasn't ended a week above that mark since late August.


Bulls Bet on a Breakout for bluebird bio Inc (BLUE)

bluebird bio Inc options traders loaded up on 40-strike calls

by 10/21/2014 10:52 AM
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Biotech stock bluebird bio Inc (NASDAQ:BLUE) typically flies under the radar with options traders. On an average day, only 330 total puts and calls change hands on BLUE. However, the stock's call options saw a relative spike in interest yesterday, with 1,146 contracts exchanged during the course of the session.

The most active BLUE strike was the November 40 call, with 764 contracts crossing the tape. The majority of these front-month bets traded at the ask price, implied volatility at the strike rose 5.2 percentage points by the close, and 623 of these calls translated into new open interest overnight -- so it's safe to assume options traders were buying to open new bullish bets on BLUE yesterday.

Shares of bluebird bio Inc (NASDAQ:BLUE) have rallied nearly 80% year-to-date, including today's 2.4% gain, to trade at $37.69. By purchasing the November 40 calls, speculative players are betting on BLUE to break out above this looming round number over the next month. Back in mid-June, the stock tagged an all-time high of $41.75 -- but in the months since, BLUE's positive momentum has consistently fizzled around the $38-$40 neighborhood.


Speculation Ramps Up on Troubled Vringo, Inc. (VRNG)

Vringo, Inc. options traders are eyeing a possible move above the $1 level

by 10/21/2014 10:25 AM
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Call options were unusually active on Vringo, Inc. (NASDAQ:VRNG) on Monday, with 4,749 contracts crossing the tape -- representing nearly five times the stock's average daily call volume of 972. The most active strike was VRNG's January 2015 1-strike call, where 1,683 contracts were traded. Nearly 1,300 of those January 1 calls translated into new open interest overnight, and it appears most of those options were bought to open.

Traders who bought those VRNG January 1 calls are betting on the stock to rally above $1 per share over the next three months. The penny stock has shed roughly 68% of its value year-to-date, and is currently trading flat with Monday's close at $0.95.

Despite the stock's close proximity to proverbial support at zero, there are still plenty of short sellers looking for Vringo, Inc. (NASDAQ:VRNG) to deepen its decline. Short interest accounts for nearly 18% of the equity's float, or nine times VRNG's average daily trading volume. In light of this fact, it's possible that some of yesterday's call buyers were actually short sellers looking to hedge against a short-term rally.


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