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Pre-Earnings Optimism Picks Up On Deckers Outdoor Corporation (DECK)

Deckers Outdoor Corp (DECK) will report earnings after tonight's close

by 1/29/2015 2:33 PM
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Deckers Outdoor Corp (NYSE:DECK) is slated to take its turn in the earnings confessional after tonight's close, and ahead of the event, call volume has surged to 16 times what's typically seen at this point in the day. Short-term contracts are in high demand, too, as evidenced by the equity's 30-day at-the-money implied volatility, which is up 4.6% at 50.7%.

Drilling down, DECK's two most active options are the weekly 1/30 83- and 89-strike calls, where it appears a long call spread was initiated for a net debit of $2.65 per pair of contracts ($3.60 ask price for the lower-strike calls minus $0.95 bid price for the higher-strike calls). By initiating the bullishly biased strategy, the trader is hoping DECK will finish tomorrow's session -- when the weekly series expires -- at or above $89, in which case she can pocket her full potential reward of $3.35 (difference between the two strikes, less the net debit).

From a wider sentiment perspective, today's call-skewed session is just more of the same. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, DECK's 10-day call/put volume ratio of 1.42 ranks higher than 69% of similar readings taken in the past year. In other words, calls have been bought to open over puts at a faster-than-usual pace in recent weeks.

Looking at the charts, though, DECK's recent trajectory -- along with sector peer Crocs, Inc. (NASDAQ:CROX) -- has been to the downside. In fact, since hitting a three-year peak of $99.88 in mid-December, the shares have shed nearly 18% to trade at $82.01. In light of this, some of the recent call buying may be a result of short sellers hedging against any post-earnings upside. At present, more than 19% of Deckers Outdoor Corp's (NYSE:DECK) float is sold short.


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Bulls Respond to Alexion Pharmaceuticals, Inc. (ALXN) CEO News

Alexion Pharmaceuticals, Inc. (ALXN) has been on both sides of breakeven today

by 1/29/2015 2:20 PM
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Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) dropped out of the gate this morning, due to a poorly received earnings report. However, the stock has come back in a big way, and was last seen 5.5% higher to trade at $187.65, after announcing the appointment of a new CEO. The news has calls crossing at eight times the pace normally seen in ALXN's options pits at this point in the session.

The weekly 1/30 177.50-strike call is the most popular option by a wide margin, with volume more than doubling the closest contract. Buy-to-open activity has been detected at the strike, as traders are looking for additional gains above $177.50 through the close tomorrow, when the contracts expire.

Today's preference for short-term calls over puts is more of the same from ALXN speculators. The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.82 is lower than roughly three-fourths of all such readings from the past year -- meaning calls have been favored heavily over puts, among options expiring within the next three months.

The positive outlook is shared within the brokerage bunch, as 13 analysts rate the stock a "buy" or better, versus two "holds" and zero "sells." Also, ALXN's consensus 12-month price target of $210.59 sits in territory never before charted by the shares.

Over the past 52 weeks, Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) has added close to 16%. However, since hitting a record high of $203.30 in early December, the equity has lost 7.7%.


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United States Steel Corporation (X) Drop Doesn't Shake Bulls

United States Steel Corporation (X) is down today, but could bounce from its 10-day trendline

by 1/29/2015 2:16 PM
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United States Steel Corporation (NYSE:X) has reversed course following yesterday's earnings-induced bull gap, and at last check was 5.5% lower at $22.28. Hitting the shares is a price-target cut to $37 from $55 at Nomura, as well as a downwardly revised valuation and full-year earnings expectations from Wells Fargo. However, none of this is stopping option bulls from wagering on near-term upside.

X calls are in demand this afternoon, with volume running at 1.3 times the expected intraday amount. Seeing buy-to-open activity is the weekly 2/6 24-strike call, as speculators are confident of a quick bounce. Specifically, the buyers believe X will muscle atop $24 by next Friday's close, when the weekly series expires.

On the charts, the stock's 10-day moving average has contained today's pullback so far. This trendline has served as resistance since early November, and today's bulls may be counting on a role-reversal to support.

During the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), puts have been the options of choice. Specifically, X's 10-day put/call volume ratio across these exchanges is 1.44 -- higher than 77% of all similar readings from the last year.

Pessimism extends beyond the options pits, as well. In fact, 29.3% of United States Steel Corporation's (NYSE:X) float is dedicated to short interest -- which would take more than a week to cover, at the stock's typical daily trading level. In fact, it's possible some of today's call buyers are shorts attempting to hedge against a near-term rally.


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Is Pandora Media, Inc. (P) Headed to $25?

Pandora Media Inc (P) option traders are targeting long-term calls

by 1/29/2015 1:37 PM
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Pandora Media Inc (NYSE:P) is down 0.8% at $16.62, bringing its year-over-year deficit to 54.5%. Nevertheless, calls are crossing the tape at a rapid-fire rate -- with 11,000 contracts traded, versus an expected intraday volume of 4,431.

Looking more closely, the January 2016 25-strike call is P's most active option, with more than 6,700 contracts exchanged. Data suggests a number of these positions are being freshly purchased, as long-term bulls wager on the stock to topple the quarter-century mark by next January, when the LEAPS expire.

As alluded to earlier, P has lost more than half of its value on a year-over-year basis, and hasn't traded north of $25 since early October. As such, delta on the option is just 0.30, or 30%.

Elsewhere, short interest on Pandora Media Inc (NYSE:P) rose 11.6% during the latest reporting period, and now accounts for 15% of the equity's float -- which would take a week to cover, at its typical daily trading volume. As such, it's possible some of today's call buying has been at the hands of short sellers seeking upside protection.


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Puts Popular as NQ Mobile Inc. (NQ) Pans New Lows

NQ Mobile Inc (ADR) (NQ) bottomed out at a new all-time low today

by 1/29/2015 1:14 PM
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Similar to fellow China-based stock Alibaba Group Holding Ltd (NYSE:BABA), NQ Mobile Inc (ADR) (NYSE:NQ) is heading south today -- down 3.3% at $3.49, after earlier bottoming out at a new record low of $3.22. As such, the stock has been placed on the short-sale restricted list, and put volume is running at 1.8 times the average intraday pace, as traders look for alternate ways to bet bearishly on the security.

Most active is NQ's February 3 put, with all signs suggesting new positions are being purchased. By buying the puts to open, traders are expecting NQ to extend its trek into all-time-low territory, and breach the $3 mark by the close on Friday, Feb. 20 -- when front-month options expire.

Today's accelerated put activity marks a change of pace in the equity's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NQ's 10-day call/put volume ratio of 4.72 ranks higher than 67% of similar readings taken in the past year. In other words, calls have been bought to open over puts at a faster-than-usual clip in recent weeks.

With nearly 19% of the stock's float sold short, though, a portion of this call buying may have been at the hands of short sellers picking up some insurance against any unexpected upside. However, in addition to today's swoon, NQ Mobile Inc (NYSE:NQ) has been trending steadily lower over the past 11 months. In fact, since hitting an annual high of $22.33 in late February, shares of NQ have shed more than 84% of their value.


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