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Most Active Options Update: Petroleo Brasileiro Petrobras SA (ADR)

Petroleo Brasileiro Petrobras SA (ADR) puts popular ahead of Brazil's presidential election

by 10/24/2014 2:31 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 giant Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), which is being targeted by short-term options bears ahead of Brazil's weekend elections.

Most Active Options Table

It's been a wild month for Petroleo Brasileiro Petrobras SA (ADR), with the stock moving in concert with the speculation surrounding this Brazil's presidential election. On the last trading day before voters head to the polls on Sunday, optimism abounds -- and PBR's 7.5% pop today is proof.

It's quite a different story in the equity's options pits, though, with put volume running at two times what's typically seen at this point in the day. Meanwhile, the stock's 30-day at-the-money (ATM) implied volatility (IV) has surged 14.9% to 122.2% -- in the 95th percentile of its annual range -- signaling elevated demand for the security's short-term contracts.

Most active is PBR's November 13 put, where 12,487 contracts have changed hands. A healthy portion of these ATM strikes have gone off at the ask price, and IV is up 10.3 percentage points, suggesting new positions are being purchased. Delta on the put is docked at negative 0.43, indicating a 43% chance the option will be in the money at the close on Friday, Nov. 21 -- when the front-month contracts expire.

From a wider sentiment perspective, today's accelerated put activity is just more of the same for a stock that's shed about 38% since hitting an annual high of $20.94 on Sept. 3, with the shares last seen near $13.05. In fact, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PBR's 50-day put/call volume ratio of 0.41 ranks in the 94th annual percentile. Simply stated, puts have been bought to open over calls on Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR) with more rapidity just 6% of the time within the past year.


Option Bulls Active Amid GameStop Corp. (GME) Uptrend

GameStop Corp. could benefit from a short-squeeze situation

by 10/24/2014 2:19 PM
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GameStop Corp. (NYSE:GME) has added 1.6% this afternoon to trade at $41.92. In fact, the shares have rallied sharply since hitting a month-to-date low of $35.82 on Oct. 15, tacking on 17%. Option traders are responding to this technical strength by rolling the dice on additional upside in the stock.

Taking a quick step back, GME calls are crossing at six times the level typically seen at this point in the day. Also, the equity's 30-day at-the-money implied volatility has popped 6.5% to 46.4%, suggesting short-term strikes are being targeted. Along those lines, the security's most active option is the front-month November 43.50 call, where nearly 5,500 contracts are on the tape.

Approximately 70% of these calls have traded at the ask price, and volume outstrips open interest, making it safe to assume bullish bets are being bought to open. This theory is also underscored by Trade-Alert and data from the International Securities Exchange (ISE). In short, these option bulls anticipate GME will topple $43.50 by the close on Friday, Nov. 21, when the options expire.

It's worth noting that 31% of GameStop Corp.'s (NYSE:GME) float is sold short. At the stock's typical daily trading volume, these bearish bets would take more than three weeks to cover. In other words, if GME can sustain its upward momentum, there's plenty of sideline cash available to boost the shares even higher. A potential catalyst could be the company's upcoming turn in the earnings confessional, scheduled between Wednesday, Nov. 19, and Monday, Nov. 24.


Options Radar: SodaStream International Ltd, DryShips, and NetSuite

Reviewing notable options activity on SodaStream International Ltd, DryShips Inc., and NetSuite Inc

by 10/24/2014 1:28 PM
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Three stocks seeing notable options activity today are at-home beverage maker SodaStream International Ltd (NASDAQ:SODA), shipping issue DryShips Inc. (NASDAQ:DRYS), and cloud concern NetSuite Inc (NYSE:N). Here's a look at how speculators are placing their bets on SODA, DRYS, and N.

  • After spending most of the morning churning around breakeven, SodaStream International Ltd (NASDAQ:SODA) took off shortly before lunchtime, and was last seen 15.9% higher at $24.55, following reports of a partnership with PepsiCo, Inc. (NYSE:PEP). Against this backdrop, call players are once again flooding SODA's options pits, with volume running at 10 times the average intraday pace, and based on the equity's 30-day at-the-money (ATM) implied volatility (IV) -- which is up 18% to 74.5% -- short-term contracts are in high demand. Drilling down, buy-to-open activity has been detected at SODA's November 25 call, as traders gamble on an extended rise over the next four weeks -- a time frame that encompasses the company's third-quarter earnings report, slated for release ahead of next Wednesday's open.

  • Having a decidedly different day is DryShips Inc. (NASDAQ:DRYS), which has plunged 22% to churn near $1.57 -- music to the ears of option bears -- after the company priced its new share offering at a 30% discount to last night's closing price of $2.00. Today's bearish gap -- which landed the stock on the short-sale restricted (SSR) list -- only highlights DRYS' longer-term technical troubles, with the shares down 45% year-over-year. However, during that time, the stock has never traded below the $1 mark, which may be why one speculator today bet big on this level to hold as a floor over the next 15 months. Specifically, a massive block of 19,360 January 2016 1-strike puts was sold to open earlier for $0.20 apiece, resulting in an initial credit of $387,200 (number of contracts * premium collected * 100 shares per contract). This also represents the maximum reward on the play, should DRYS maintain its foothold atop the dollar mark through January 2016 options expiration.

  • NetSuite Inc (NYSE:N), meanwhile, has rallied 12.4% to $104.45 -- and moved back into the black on a year-to-date basis -- after offering up a better-than-expected quarterly earnings report and an upbeat outlook for the current quarter. What's more, the stock received no fewer than nine price-target hikes in the wake of its results, including one from Credit Suisse to $125 from $115, with the brokerage firm underscoring its "outperform" rating. On the options front, overall volume has soared to seven times what's typically seen at this point in the day, and following last night's scheduled event, the equity's 30-day ATM IV has plunged 23.8% to 33.4%. New positions are being initiated at the stock's November 115 call and November 90 put, but it appears both may be seeing sell-to-open activity.


Most Active Weekly Options: Ford Motor Company (F)

Short-term option bulls are targeting reeling Ford Motor Company

by 10/24/2014 10:49 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 Ford Motor Company (NYSE:F), where options traders are eyeing the $14 level.

Most Active Weekly Options Table

Ford Motor Company is off 3% this morning at $13.97, following its third-quarter earnings report. While the company posted an earnings beat, poor results in Europe and Russia -- as well as costs associated with transitioning its F-150 pickup to aluminum from steel -- are weighing on the shares.

Nevertheless, options traders are taking an upbeat approach to F, with calls crossing at a 46% mark-up to the average intraday rate, and outnumbering puts by a nearly 4-to-1 margin. What's more, the stock's 30-day at-the-money implied volatility has edged 1.3% higher to 27.9%, signaling elevated demand for short-term strikes.

Looking more closely, F's two most action options are the weekly 10/31 and 11/14 14-strike calls, where more than 7,000 total contracts have been exchanged. The majority have traded at the ask price, and volume outstrips open interest, pointing to buy-to-open activity. In other words, these speculators anticipate Ford Motor Company (NYSE:F) will muscle back atop $14 by the respective expiration dates.


Bulls Bet On Arrowhead Research Corp (ARWR) to Shoot Higher

Arrowhead Research Corp has been churning around $7 over the past two weeks

by 10/24/2014 9:59 AM
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Biopharmaceutical firm Arrowhead Research Corp (NASDAQ:ARWR) has struggled on the charts lately, exacerbated by a roughly 44% plunge on Oct. 8, due to poorly received mid-stage trial results of the company's hepatitis B treatment. Since then, the shares have largely churned around $7, closing last night at $6.92. However, one group of traders yesterday wagered on short-term upside for the stock.

Diving right in, calls were exchanged at a 26% mark-up to typical daily levels on Thursday. Also, ARWR's 30-day at-the-money implied volatility rose 8.6% to 132.7%, hinting at elevated demand for short-term strikes. In fact, eight of the security's 10 most active options belong to the front-month November series.

Leading the way was ARWR's November 9 call, where 2,227 contracts changed hands. Almost all traded at the ask price, and open interest jumped overnight, suggesting bullish bets were freshly initiated. In other words, these option players believe ARWR will topple $9 by the close on Friday, Nov. 21, when front-month options expire. Of course, it's possible some of these buyers are short sellers attempting to hedge, considering 27.4% of the stock's float is sold short.

On the fundamental front, the call's lifetime encompasses Arrowhead Research Corp's (NASDAQ:ARWR) fiscal fourth-quarter earnings report, due out between Tuesday, Nov. 10, and Friday, Nov. 14. The Street is expecting a per-share loss of 24 cents from the biopharmaceutical company.


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