Schaeffer's Options Center
Sponsored by:
Schaeffer's Daily Option Blog

Option Bulls Hungry for Yum! Brands, Inc. (YUM) Calls

Last-minute option bulls are buying to open Yum! Brands, Inc. calls

by 10/31/2014 12:13 PM
Stocks quoted in this article:

Yum! Brands, Inc. (NYSE:YUM) has rallied 2.5% to trade at $71.75, fueled by rumors regarding a potential spinoff of the company's China-based business, according to Trade-Alert. What's more, options volume is exploding -- especially on the call side, where contracts are crossing at 11 times the expected intraday rate.

What's more, short-term strikes are in high demand, as YUM's 30-day at-the-money implied volatility has spiked 12.8% to 17.3%. In fact, eight of the 10 most active strikes expire within the next three weeks.

Digging deeper, eleventh-hour bulls are buying to open the equity's weekly 10/31 72-strike call for a volume-weighted average price (VWAP) of $0.35. With 5,240 contracts exchanged so far, this option is YUM's most active by a healthy margin. Long story short, these traders expect the underlying to be sitting atop breakeven at $72.35 (strike plus VWAP) at tonight's close, when the weekly series expires.

Meanwhile, slightly longer-term bulls are targeting the stock's December 75 call, where 2,773 contracts are on the tape. These buyers anticipate YUM will advance past $75 over the next seven weeks -- a mark that hasn't been toppled on a weekly closing basis since mid-July.

Looking at the charts, Yum! Brands, Inc. (NYSE:YUM) has moved little over the past three months, largely churning in the $66-to-$73 range. Longer term, the shares are down about 5% since the start of the calendar year.


permalink

Most Active Weekly Options: General Motors Company (GM)

Option bulls bet on General Motors Company to hurdle overhead resistance

by 10/31/2014 11:15 AM
Stocks quoted in this article:

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 General Motors Company (NYSE:GM), where short-term option bulls have been busy .

Most Active Weekly Options Table

General Motors Company is following the broader market higher, so far adding 2.2% to trade at $31.45. Year-to-date, however, the shares are sitting on a 23% deficit, and have underperformed the broader S&P 500 Index (SPX) by nearly 11 percentage points during the past three months.

In the options pits, GM calls are crossing the tape at their usual intraday rate, yet roughly triple the number of puts traded. Most active is the weekly 11/7 32-strike call, where just over 5,900 contracts have changed hands. The vast majority have done so at the ask price, implied volatility (IV) has edged higher, and volume outstrips open interest -- collectively hinting at buy-to-open activity.

In short, these short-term call buyers expect General Motors Company (NYSE:GM) to topple $32 by next Friday's closing bell, when the weekly series expires. However, this strike -- which corresponds with the stock's descending 40-day moving average, as well as peak call open interest for the 11/7 series -- has presented a stubborn layer of technical resistance this month, stopping multiple rally attempts.


permalink

Options Check-Up: Plug Power Inc, FireEye Inc, and Zillow Inc

Analyzing recent option activity on Plug Power Inc, FireEye Inc, and Zillow Inc

by 10/31/2014 7:45 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are fuel cell specialist Plug Power Inc (NASDAQ:PLUG), virtual security firm FireEye Inc (NASDAQ:FEYE), and restaurant chain Zillow Inc (NASDAQ:Z). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on PLUG, FEYE, and Z.

  • Calls have been quite popular on PLUG lately, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 10-day ISE/CBOE/PHLX call/put volume ratio stands at 38.86 -- not far from its freshly tagged multi-year high of 43.96. Plug Power Inc has vaulted to a gain of 190% in 2014, but has been churning close to the $4.50 level for the past month (and ended Thursday squarely at $4.49). During the coming weeks, speculators are apparently banking on a continuation of this muted price trend. The stock's Schaeffer's Volatility Index (SVI) of 77% ranks in the slim 7th percentile of its annual range, as front-month options have rarely priced in lower volatility expectations.

  • FEYE sports a 10-day call/put volume ratio of 7.36 on the ISE, CBOE, and PHLX, which outranks 84% of comparable readings from the last year -- indicating a stronger-than-usual preference toward bullish bets over bearish during the past couple of weeks. This trend coincides with a bounce higher for FEYE shares, which have gained 35.6% from their Oct. 13 annual low of $24.81, ending Thursday's session at $33.63. Looking ahead, FireEye Inc is set to report third-quarter earnings after the market closes next Tuesday, Nov. 4, but front-month options are still fairly priced. The security's SVI stands at 74%, in the middling 48th annual percentile.

  • Z is also a favorite among call players, having racked up a 10-day call/put volume ratio of 1.51 on the ISE, CBOE, and PHLX. This ratio ranks higher than 88% of other such readings over the past year, pointing to a pronounced bullish skew among speculative players. Traders may be optimistic for a bounce from the century mark, as the $100 level has so far supported the stock's pullback from its July peak of $164.90. In fact, Z shares settled at $104.24 yesterday, up 27.5% year-to-date. Zillow Inc will announce its third-quarter results after the close next Wednesday, Nov. 5, but front-month options aren't exactly pricing in a major move. The stock's SVI checks in at 58%, in the tame 30th annual percentile.

permalink

Pre-Earnings Option Bears Target Starbucks Corporation (SBUX)

Starbucks Corporation will report quarterly earnings after tonight's close

by 10/30/2014 2:53 PM
Stocks quoted in this article:

Option bears have set their sights on Starbucks Corporation (NASDAQ:SBUX) in the months leading up to the company's quarterly earnings report, which is slated for release after tonight's close. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day put/call volume ratio of 1.17 ranks higher than all other readings taken in the past year.

Echoing this preference for puts is the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which ranks higher than 79% of similar readings taken in the past year. Simply stated, short-term speculators are more put-skewed than usual toward SBUX.

In the front-month series, specifically, peak put open interest can be found at the November 72.50 strike, where 4,808 contracts are currently in residence. The majority of positions here have been bought to open in recent months, meaning speculators expect SBUX to retreat south of $72.50 by the close on Friday, Nov. 21, when the options expire.

This accelerated put volume is being continued in today's session, as well, with the contracts crossing the tape at a rate 1.8 times the intraday average. Buy-to-open activity has been detected at the equity's weekly 10/31 75-strike put, as eleventh-hour traders roll the dice on a quick retreat below the $75 mark following tonight's earnings announcement. Should SBUX maintain its perch atop the strike through tomorrow's close -- when the weekly series expires -- the most the speculators stand to lose is the initial premium paid.

Looking back over the past four quarters, SBUX has averaged a modest single-session post-earnings gain of 0.23%. The options market is pricing in a bigger move of 3%, and considering the weekly 10/31 77-strike put is pricing in higher implied volatility than the call (76.2% versus 75.3%), it seems like it is expecting the action to resolve to the downside.

Longer term, Starbucks Corporation (NASDAQ:SBUX) has failed to make any major moves on the charts in 2014, with the shares down 1.3% to trade at $77.36. For the java giant's fiscal fourth quarter, Wall Street is calling for a per-share profit of 74 cents.


permalink

Most Active Weekly Options: Gilead Sciences, Inc. (GILD)

Eleventh-hour Gilead Sciences, Inc. traders roll the dice on another record high

by 10/30/2014 1:43 PM
Stocks quoted in this article:

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 biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), as eleventh-hour option bulls gamble on a fresh all-time peak.

Most Active Weekly Options Table

After taking a post-earnings dip yesterday, Gilead Sciences, Inc. is up 3% today -- and earlier hit a record high of $114.35 -- after a pair of analysts maintained their bullish stances on the stock. Specifically, S&P Capital IQ reiterated its $150 price target, citing forecasts for "a re-acceleration of Hepatitis C sales driven by Harvoni in the fourth quarter and 2015." Elsewhere, an analyst at Citigroup suggested traders "buy the dip as the destocking in Sovaldi will be compensated by stocking in Harvoni in the fourth quarter ... We continue to expect material upside to consensus estimates in 2015 for Hepatitis C and this drives our conviction in the stock."

Against this backdrop, calls are trading at 1.2 times the average intraday rate, and are outpacing puts by a 2-to-1 margin. A significant portion of the day's action is being driven by eleventh-hour speculators, as five of GILD's 10 most active options expire at tomorrow's closing bell.

Receiving the most attention is the equity's weekly 10/31 115-strike call, which is being bought to open for a volume-weighted average price (VWAP) of $0.56. Based on this average entry price, breakeven for today's call buyers is $115.56 (strike plus the VWAP). Gains will accumulate on a move north of here -- representing a new all-time peak for the shares -- while losses are capped at the premium paid, should Gilead Sciences, Inc. (NASDAQ:GILD) stay south of the strike through tomorrow's close.


permalink

1 
2 
3 
4 
5 
… 
Featured Brokers
ADVERTISEMENT
Unusual Option Volume
Option Flow
ADVERTISEMENT
ADVERTISEMENT
Most Active Stocks
Most Active Option Strikes
Largest Open Interest

Partner Center

© 2014 Schaeffer's Investment Research, Inc. 5151 Pfeiffer Road, Suite 250, Cincinnati, Ohio 45242 Phone: (800) 448-2080 FAX: (513) 589-3810 Int'l Callers: (513) 589-3800 Email: service@sir-inc.com

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.

Market Data provided by QuoteMedia.com | Data delayed 15-20 minutes unless otherwise indicated.