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Options Radar: Tesla Motors Inc (TSLA), SolarCity Corp, J C Penney

Reviewing notable options activity on Tesla Motors Inc, SolarCity Corp, and J C Penney Company Inc

by 9/19/2014 1:47 PM
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Three stocks seeing notable options activity today are Elon Musk's Tesla Motors Inc (NASDAQ:TSLA) and SolarCity Corp (NASDAQ:SCTY), and retailer J C Penney Company Inc (NYSE:JCP). Here's a look at how today's options traders have been placing their bets on these three names.

  • Tesla Motors Inc (NASDAQ:TSLA) is off 3% to trade at $255.83, and options traders are responding by placing last-minute bearish bets. Puts are running at nearly twice the usual intraday clip, and short-term strikes are in demand, per the stock's 30-day at-the-money (ATM) implied volatility (IV) -- up 6.4% to 35.5%. Most active is TSLA's September 255 put, where bearish speculators are opening new long positions, expecting additional downside over the last few hours of today's session. Also seeing considerable action is the September 260 call, which is being sold to open by traders gambling on an extremely short-term ceiling for the shares.

  • SolarCity Corp (NASDAQ:SCTY) has shed 4.1% to churn near $63.32, bringing put players to the table. In fact, puts are crossing at quadruple the rate expected at this point in the day. ATM IV is also 2.5% higher at 49.3%, signaling elevated interest in short-term options. Digging deeper, speculators are buying to open SCTY's September 64 puts, in the hopes that the shares will continue to move lower through the end of today's session. Others are buying to open the equity's weekly 10/3 60-strike puts.

  • J C Penney Company Inc (NYSE:JCP) is plummeting this afternoon, down 5% to $10.23 -- a day after losing nearly 2% due to Credit Suisse's negative remarks. Specifically, the brokerage firm said it remains "very cautious" on JCP. However, the shares appear to have found a foothold this afternoon at their 40-day moving average, currently located at $10.16. Meanwhile, calls are trading at more than twice the typical intraday clip, and ATM IV has jumped 5% to 44.4%, indicating short-term strikes are sought-after. Not all of those calls have been of the "vanilla" variety, however. Just before noon, one trader may have rolled out his skeptical position on JCP, by buying to close 9,200 October 12 calls and selling to open a matching block of November 12 calls.

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Most Active Options Update: Rackspace Hosting, Inc. (RAX)

Eleventh-hour traders are buying to open Rackspace Hosting, Inc. calls

by 9/19/2014 11:34 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 Rackspace Hosting, Inc. (NYSE:RAX), where soon-to-expire contracts are flying off the shelves .

Most Active Options Table

Rackspace Hosting, Inc. has tacked on 1.6% to trade at $32.80, as the shares attempt to recover from Wednesday's news-induced drubbing. Not surprisingly, options traders have shown a decisive preference for calls over puts, with the former crossing at twice the normal intraday pace. Also, RAX's 30-day at-the-money implied volatility has risen 5.4% to 39.6%, signaling elevated demand for short-term strikes.

Most active is the near-the-money September 32.50 call, which expires at tonight's close. Roughly 3,400 contracts have crossed the tape here, and it appears the majority are being bought to open, as speculators wager on continued gains for Rackspace Hosting, Inc. (NYSE:RAX) this afternoon.


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Most Active Options Update: Microsoft Corporation (MSFT)

Call volume is surging on Microsoft Corporation amid new high

by 9/19/2014 11:12 AM
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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 Microsoft Corporation (NASDAQ:MSFT), which has seen a mix of call selling and buying.

Most Active Options Table

Microsoft Corporation is up slightly this morning at $46.77, but earlier managed to touch a new 14-year high of $47.19. The technical milestone has call players buzzing, as the contracts are changing hands at more than quadruple the typical intraday rate. Short-term strikes are in demand, per the stock's 30-day at-the-money implied volatility (IV), which as popped 4.6% to 15.3%.

Diving into the details, MSFT's most active option is the near-the-money September 47 call, where close to 20,000 contracts are on the tape. A considerable portion of the contracts have crossed at the bid price, and data from the International Securities Exchange (ISE) points to some sell-to-close activity. In short, it appears that option bulls are unwinding their bets ahead of tonight's expiration.

Slightly longer-term traders are targeting MSFT's weekly 10/10 48-strike call. Over 90% have been exchanged at the ask price, IV is edging higher, and the ISE confirms newly bought bullish bets. By purchasing these out-of-the-money calls at a volume-weighted average price (VWAP) of $0.31, the speculators are gambling on the shares toppling $48.31 (strike plus VWAP) at the close on Friday, Oct. 10 -- when the weekly contracts expire. Gains are theoretically unlimited north of there, while potential losses are limited to the initial cash layout, should the equity settle south of $48 three weeks from today.

In fundamental news, Microsoft Corporation (NASDAQ:MSFT) announced late Thursday it will lay off 2,100 employees, and will shutter its Silicon Valley research-and-development center. The moves are not unexpected, as CEO Satya Nadella previously outlined plans to cut 14% of MSFT's global workforce, or about 18,000 positions.


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Janus Capital Group Inc (JNS) and the $800,000 Bearish Gamble

Janus Capital Group Inc's option volume yesterday centered on the December 12 put

by 9/19/2014 10:01 AM
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Janus Capital Group Inc (NYSE:JNS) puts traded at nearly double the expected rate yesterday, and easily outstripped the number of calls on the tape. By the numbers, 7,381 puts were exchanged, compared to a measly 185 calls.

Almost all of JNS' total options volume can be traced to the December 12 put, where 7,209 contracts changed hands. The largest single block consisted of 6,221 contracts, and according to data from Trade-Alert, it was bought to open for $1.30 each. Thus, this speculator laid out an initial premium of more than $800,000 (premium paid * number of contracts * 100 shares per contract) for his bearish bets.

Long story short, the put buyer needs JNS to move lower over the next three months. At-expiration breakeven for the transaction is $10.70 (strike less premium paid) -- territory not explored since mid-April -- with additional gains to be had on a move lower. On the other hand, should shares of the investment firm settle at or above $12 at the close on Friday, Dec. 19 -- when the contracts cease trading -- the buyer will part with his initial cash outlay.

Taking a step back, Janus Capital Group Inc (NYSE:JNS) is off 6.6% in 2014 to churn around $11.56. What's more, the stock's 40-week moving average -- which had been functioning as support since October -- is now overhead at $11.71, and may be reversing roles to act as resistance.


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Options Check-Up: DryShips Inc., Netflix, Inc., and Cisco Systems, Inc

Analyzing recent option activity on DryShips Inc., Netflix, Inc., and Cisco Systems, Inc.

by 9/19/2014 8:00 AM
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Among the stocks attracting attention from options traders lately are transportation issue DryShips Inc. (NASDAQ:DRYS), streaming video titan Netflix, Inc. (NASDAQ:NFLX), and big-cap tech name Cisco Systems, Inc. (NASDAQ:CSCO). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on DRYS, NFLX, and CSCO.

  • DRYS finished yesterday down 2.6% at $3.20, shedding 35.7% since the start of the year. The pace of call-buying has accelerated in the past couple of days. According to the equity's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 61.55, which is in the 97th percentile of its annual range, calls have been bought to open at a faster-than-normal rate over puts. DryShips Inc.'s Schaeffer's Volatility Index (SVI) of 44% falls in the 6th annual percentile, suggesting that short-term options are at a bargain price, on a volatility basis.

  • NFLX ended yesterday by gaining 1.1% and closing at $459.60, up 24.8% since the start of the year. Short interest rose 18.4% during the most recent reporting period, and now comprises 11.41% of the equity's float -- which would take almost a week to cover, at Netflix Inc.'s average daily trading volume. The 50-day ISE/CBOE/PHLX call/put volume ratio of 1.03 sits 16 percentage points away from an annual peak, implying that calls have been bought to open over puts at a quicker-than-usual pace. SVI for NFLX is at 25%, in the 8th percentile of its annual range, meaning the equity's short-term options are attractively priced right now.

  • CSCO tacked on 0.1% to end the day at $25.22. Year-to-date, CSCO has gained 12%. Over the past 10 days, puts for the equity have been purchased at a rate of 0.6 per call, according to the ISE, CBOE, and PHLX; this ratio is higher than 74% of similar readings from the past year, pointing to a healthier-than-usual appetite for bearish bets over bullish. Cisco Systems, Inc.'s SVI sits at 14%, which is in the 15th percentile of its annual range, indicating the stock's short-term options are relatively inexpensive right now.

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