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Google Inc. (GOOGL) Sees Last-Minute Bull Rush

For the second day in a row, Google Inc (GOOGL) weekly calls are popular

by 2/27/2015 3:22 PM
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Activity has picked up in Google Inc's (NASDAQ:GOOGL) options pits today, with contracts crossing the tape at an 84% mark-up to the expected intraday rate. Calls are leading the way, nearly doubling the volume of puts. Similar to yesterday, much of today's activity has centered around short-term options, as nine of GOOGL's 10 most active contracts expire at today's close.

The most popular contract is the weekly 2/27 565-strike call, where nearly 5,000 contracts have crossed. Buy-to-open activity has transpired here, as traders look for GOOGL to rally above $565 within the next hour. As it stands now, the shares' intraday high is $569.42.

More ambitious traders have bought to open the weekly 2/27 567.50- and 570-strike calls. With GOOGL's price action today, the former option moved into the money for a short period, while the latter came up just short.

As was mentioned, speculators have been targeting calls in GOOGL's options pits for some time now. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for every one of the stock's puts that have been bought to open during the past two weeks, 2.22 calls have been purchased.

Shifting focus, analysts are almost entirely bullish on the security. Of the 27 brokerage firms tracking the equity, 22 rate it a "buy" or better, with the remaining five handing out "hold" recommendations.

On a long-term technical basis, Google Inc (NASDAQ:GOOGL) has struggled. Year-over-year, the shares are off 7.7%. However, GOOGL was last seen 0.4% higher at $561.59, and on pace to end atop its 200-day moving average for the first time since early October.


Eleventh-Hour Skeptics Swarm Splunk Inc. (SPLK)

Splunk Inc (SPLK) is struggling despite an earnings beat and a round of price-target hikes

by 2/27/2015 2:29 PM
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Splunk Inc (NASDAQ:SPLK) received a rush of positive analyst attention this morning, following last night's well-received earnings report and better-than-expected guidance. In fact, no fewer than 15 analysts have upped their price targets on the software stock. However, it appears options traders aren't buying the optimism.

Taking a quick step back, SPLK options are trading at 10 times the expected intraday rate, and call volume roughly doubles put volume. Looking more closely, eleventh-hour speculators are targeting the weekly 2/27 series, which expires in roughly 1.5 hours.

Buy-to-open activity is detected at the weekly 2/27 70-strike put, as bearish bettors bank on additional downside through today's close. Meanwhile, it looks like a number of call traders are also skeptical, as sell-to-open action may be transpiring at the weekly 2/27 69- and 70-strike calls, which are currently out of the money. In other words, these sellers are convinced any potential rebound in the shares today will be capped at the respective strikes.

On the charts, despite surging out of the gate, Splunk Inc (NASDAQ:SPLK) has dropped to a 2.7% loss, currently perched at $67.68. What's more, Schaeffer's Senior VP of Research Todd Salamone earlier noted the stock was exhibiting a familiar post-earnings technical signal. If past is prologue, this latest candle pattern could spell additional downside for SPLK.


General Electric Company (GE) and the $6.5 Million Bullish Bet

General Electric Company (GE) was the target of a massive call spread

by 2/27/2015 1:51 PM
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To say call players are active in General Electric Company's (NYSE:GE) options pits today would be an understatement, with the contracts crossing the tape at a rate 12 times the intraday average. By the numbers, 349,000 calls have changed hands, compared to around 26,000 puts.

Drilling down, the majority of the day's action has centered on the January 2017 30- and 35-strike calls, where four blocks totaling 250,000 contracts changed hands shortly after the open. According to Trade-Alert, the lower-strike calls were bought, while the higher-strike calls were sold, as one speculator initiated a long call spread for an initial cash outlay of $6.5 million (125,000 contracts * $0.52 net debit * 100 shares per contract).

This is the most the speculator stands to lose, should GE settle south of $30 -- the bought strike -- at January 2017 options expiration. Meanwhile, although the trader's profit will begin to accrue on a move north of breakeven at $30.52 (bought strike + $0.52 net debit), it's capped at $4.48 (difference between the two strikes less the net debit) no matter how far north of $35 GE may climb, due to the sold 35-strike call.

This bullishly skewed activity marks a change of pace in GE's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.64 ranks in the 81st annual percentile, meaning puts have been bought to open over calls at an accelerated pace in recent months.

Technically speaking, General Electric Company (NYSE:GE) is poised to close out February with a respectable 9.5% gain. The stock is continuing this momentum today -- bucking the bearish footsteps of the broader equities market -- and was last seen up 1% at $26.17. Amid this uptrend, the security has regained its footing atop its 200-day moving average -- a trendline that has contained the majority of GE's advances since last July, suggesting a new layer of support may be forming.

Daily Chart of GE Since June 2014 With 200-Day Moving Average


Legal Drama Lures Ericsson (ADR) (ERIC) Bulls

One Ericsson (ADR) (ERIC) trader is rolling the dice on a move north of $14

by 2/27/2015 1:41 PM
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Swedish tech issue Ericsson (ADR) (NASDAQ:ERIC) has seen major call volume today, after the firm ramped up its patent infringement dispute with Apple Inc. (NASDAQ:AAPL) -- just two days after the iPhone maker suffered a legal defeat. Against this backdrop, it looks like some option players are gambling on new highs for ERIC within the next few months.

Intraday call volume is running at 19 times the norm, with nearly all of the action attributable to a sweep of roughly 3,500 contracts at the October 14 strike. The buyer bought the contracts to open at a volume-weighted average price (VWAP) of $0.49, placing at-expiration breakeven at $14.49 (strike plus VWAP) -- territory not charted since July 2011. Should the equity remain south of $14 through October options expiration, the most the trader will lose is the initial premium paid for the calls.

Today's appetite for Ericsson (NASDAQ:ERIC) calls is just more of the same for the stock, which was last seen 0.5% higher at $12.95. 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 84.17 stands 13 percentage points from an annual high, pointing to accelerated call buying of late.

Weekly Chart of ERIC since May 2011


Put Trader Dominates Mobileye NV (MBLY) Options Pits

One Mobileye NV (MBLY) trader initiated a ratio spread

by 2/27/2015 1:40 PM
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Just a day after posting an earnings beat, Mobileye NV (NYSE:MBLY) is following the broader market lower -- down 0.7% this afternoon to trade at $35.56. As such, put volume has ramped up, with the contracts crossing at more than double the usual pace for this point in the session.

Digging deeper, roughly 70% of the MBLY puts on the tape were exchanged as part of what looks to be a two-legged ratio spread. Specifically, it appears one speculator bought to open 5,000 in-the-money March 43 puts, while selling to open 2,000 near-the-money March 35 puts -- helping to offset the cost of the larger block. From the looks of it, this trader is rolling the dice on additional downside through March options expiration -- though this theory may be complicated by Trade-Alert indications that both lots were tied to stock.

On the sentiment front, MBLY received a $2 price-target hike to $43 from Baird, which nonetheless underscored a tepid "neutral" rating. The former comes as a mild surprise, considering the stock has dropped more than 12% year-to-date.

Less surprising is the high level of short interest on Mobileye NV (NYSE:MBLY). Specifically, 14.5% of the stock's float is sold short, and it would take more than six sessions to buy back all these positions, given MBLY's average daily trading volume.


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