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Take-Two Interactive Software, Inc. (TTWO) Bulls Target Six-Year Highs

Take-Two Interactive Software, Inc. is soaring today on M&A-related rumors

by 8/29/2014 1:33 PM
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Take-Two Interactive Software, Inc. (NASDAQ:TTWO) has jumped 4.3% today, as rumors swirl that the video game maker could be a potential takeover target for sector peer Activision Blizzard, Inc. (NASDAQ:ATVI). In the stock's options pits, calls are running at 25 times the average intraday pace, with 16,000 contracts on the tape. As a point of comparison, fewer than 500 puts have been exchanged.

Traders are showing a preference for short-term contracts, as evidenced by the equity's 30-day at-the-money implied volatility, which is up 32.7% at 36.8%. Buy-to-open activity has been detected at TTWO's October 25 call, and according to Trade-Alert, a portion of the activity could be a result of speculators rolling up their now in-the-money September 23 and 24 calls to bet on more upside.

The volume-weighted average price (VWAP) for the October 25 calls is $0.56, making breakeven at the close on Friday, Oct. 17 -- when back-month options expire -- $25.56 (strike plus VWAP), a level not seen by the stock since August 2008. Profit will accrue on a move north of here, while losses are capped at the initial premium paid, should TTWO close south of the strike at expiration.

Today's move higher only highlights Take-Two Interactive Software, Inc.'s (NASDAQ:TTWO) withstanding technical tenacity, with the shares up 35% year-to-date to trade at $23.42. In spite of this, short interest accounts for 17.5% of the stock's available float. Should the security continue to make ground, an unwinding of these short positions could help fuel more gains. At present, it would take almost six sessions to cover all of TTWO's shorted shares.


Most Active Options Update: Netflix, Inc. (NFLX)

Netflix, Inc. options traders are placing eleventh-hour bets

by 8/29/2014 1:22 PM
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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 streaming video issue Netflix, Inc. (NASDAQ:NFLX), which has seen a flurry of eleventh-hour betting.

Most Active Options Table

Netflix, Inc. was last seen 0.5% higher at $477.79, and is on pace for a monthly gain of 13%. Meanwhile, options traders are placing their bets on where the stock will end the session, as the 10 most active options expire at the closing bell. What's more, volume has surpassed open interest at six of those strikes, underscoring our theory of new last-minute positions.

Among those is the weekly 8/29 480-strike call, which has seen more than 6,000 contracts change hands -- the most of any strike. The speculators buying the calls to open are doing so at a volume-weighted average price (VWAP) of $0.89, meaning they'll profit if NFLX settles north of $480.89 (strike plus VWAP) today. The stock touched an intraday high of $480.50 earlier, so surpassing breakeven isn't outside the realm of possibility. Should the equity close beneath $480, the buyers will forfeit the initial premium paid for the calls.

Those selling the calls to open are expecting NFLX to remain south of the strike through the close. In this best-case scenario, the calls will remain out of the money, and the sellers can retain the initial net credit. Should NFLX climb back atop the strike, the sellers' losses will begin to add up.

While intraday calls and puts are trading near parity, the former have emerged as the preferred options -- among buyers, anyway -- of late. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 1.16 stands higher than 87% of all other readings from the past year. In other words, Netflix, Inc. (NASDAQ:NFLX) option buyers have picked up calls over puts at a faster-than-usual clip during the past couple of weeks.


Options Radar: Tesla Motors Inc (TSLA), Kandi Technologies, and Veeva

Reviewing notable options activity on Tesla Motors Inc, Kandi Technologies Group Inc, and Veeva Systems Inc

by 8/29/2014 12:38 PM
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Three names seeing notable options activity today are electric car makers Tesla Motors Inc (NASDAQ:TSLA) and Kandi Technologies Group Inc (NASDAQ:KNDI), and cloud concern Veeva Systems Inc (NYSE:VEEV). Here's a look at how today's options traders have been placing their bets on TSLA, KNDI, and VEEV.

  • TSLA hit the $272.00 mark earlier -- its highest perch on record -- after inking a deal with China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) to build 400 charging stations throughout the mainland. At last check, though, the shares were sitting 2.5% higher at $270.53, bringing their year-to-date lead to a brow-raising 80%. Today's rally has sparked a rush of activity among call players, with volume running at two times what's typically seen at this point in the day. Eleventh-hour traders are buying to open the equity's weekly 8/29 270-strike call, as they gamble on even more upside for TSLA by tonight's close.

  • It's been a volatile week for KNDI, which is off 6% today, after the company priced an offering to institutional investors at $17.20 per share -- a discount to the stock's current perch at $17.98. As such, the equity has been placed on the short-sale restricted list, sending option volume soaring to almost four times the intraday average. Most active is the stock's October 17 call, which is being bought to open for a volume-weighted average price (VWAP) of $2.21. In order for these calls to be profitable at the close on Friday, Oct. 17 -- when the back-month options expire -- KNDI needs to rebound back above breakeven at $19.21 (strike plus VWAP).

  • VEEV call volume has jumped to 22 times the expected intraday amount, as traders react to the stock's 16.4% post-earnings pop to trade at $29.15. Adding to the bullish buzz is a round of price-target hikes from J.P. Morgan Securities, Canaccord Genuity, and Deutsche Bank. Despite today's accelerated option activity, VEEV's 30-day at-the-money implied volatility has plunged 16.9% to 41.3% -- after earlier tagging a 52-week low -- in the wake of last night's scheduled event. The stock's December 30 call has received the most attention, and according to data from the International Securities Exchange (ISE), there is a mix of buy- and sell-to-open activity happening here.


Most Active Options Update: Advanced Micro Devices, Inc. (AMD)

Option buyers expect a solid September for Advanced Micro Devices, Inc.

by 8/29/2014 12:05 PM
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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 semiconductor concern Advanced Micro Devices, Inc. (NYSE:AMD), which has seen accelerated call volume.

Most Active Options Table

Advanced Micro Devices, Inc. has added 0.7% to flirt with $4.17, bringing its year-to-date gain to 7.7%. Options traders today are betting on the stock to fill its post-earnings bear gap from mid-July in the next few weeks, buying to open short-term calls.

Overall call volume is running at a 75% mark-up to the intraday average, with roughly 11,000 contracts exchanged. For comparison, fewer than 750 AMD puts have traded. Reflecting the healthy appetite for short-term options, the stock's 30-day at-the-money (ATM) implied volatility (IV) is up 2.5% to 40.9%.

Most active by a mile is the weekly 9/26 4.50-strike call, which has accounted for about half the total call volume thus far. Four-fifths of the calls traded on the ask side, and volume has surpassed open interest at the strike, hinting at newly bought bullish bets.

By purchasing the calls at a volume-weighted average price (VWAP) of $0.07, the buyers will profit if AMD is sitting atop $4.57 (strike plus VWAP) -- the stock's closing price before the aforementioned bear gap -- at the close on Friday, Sept. 26, when the options expire. Profit potential is theoretically unlimited north of breakeven, while risk is capped at the initial premium paid for the calls, should AMD fail to topple the strike by expiration.

It's worth noting, however, that short interest accounts for 22.5% of AMD's total available float. At the stock's average pace of trading, it would take about a week to repurchase all of these bearish bets. Against this backdrop, it's possible that shorts are buying the aforementioned calls to hedge against an extended short-term rebound.

Whatever the motive -- and despite ATM IV edging higher today -- now is an opportune time for buyers to roll the dice with short-term options. Advanced Micro Devices, Inc.'s (NYSE:AMD) Schaeffer's Volatility Index (SVI) of 40% sits in the bottom quartile of its annual range, suggesting the equity's front-month contracts are historically inexpensive right now.


Amid Continued Rally, GoPro Inc (GPRO) Bulls Pounce

GoPro Inc call buyers are active as the stock continues to cruise higher

by 8/29/2014 10:51 AM
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GoPro Inc (NASDAQ:GPRO) is soaring again this morning, up 3.5% to hover near $50.61 -- just a day after rallying 7.4%. In fact, the stock earlier touched a record high of $51.75. Not surprisingly, calls are trading at a fast and furious pace -- at five times the typical intraday volume -- and short-term contracts are being targeted, based on the 9.0% rise (to 62.7%) in GPRO's 30-day at-the-money implied volatility.

The October 55 call has seen notable buy-to-open activity, and with more than 1,700 contracts on the tape, it's GPRO's second most active strike. These out-of-the-money (OOTM) bets are being scooped up at a volume-weighted average price (VWAP) of $1.79, resulting in an at-expiration breakeven mark of $56.79 (strike plus VWAP). North of this level, gains are theoretically unlimited, while risk is capped at the initial premium paid, should the shares be resting below the strike at the close on Friday, Oct. 17 -- when the back-month options expire.

From a sentiment standpoint, short interest on GoPro Inc (NASDAQ:GPRO) is on the rise. In fact, during the two most recent reporting periods, short interest on the equity jumped 30.8%, and now comprises 5.5% of the stock's float.


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