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Options Check-Up: NVIDIA Corporation, Pandora Media, and T-Mobile US

Analyzing recent option activity on NVIDIA Corporation, Pandora Media Inc, and T-Mobile US Inc

by 10/2/2014 7:54 AM
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Among the stocks attracting attention from options traders lately are graphics chips specialist NVIDIA Corporation (NASDAQ:NVDA), streaming music provider Pandora Media Inc (NYSE:P), and wireless firm T-Mobile US Inc (NYSE:TMUS). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on NVDA, P, and TMUS.

  • Puts are the options of choice on NVDA, according to buy-to-open volume data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past 10 days, the stock has garnered a put/call volume ratio of 0.51 across these three exchanges, which ranks higher than 81% of similar readings taken during the past year -- pointing to a stronger-than-usual appetite for bearish bets over bullish. At $18.27, shares of NVIDIA Corporation have gained a very respectable 14% year-to-date, but they've spent most of the past seven months churning between the $17.50 and $19.50 levels. Now is a good time to pick up front-month bets on NVDA at a reasonable price, as the stock's Schaeffer's Volatility Index (SVI) of 25% arrives in the 20th annual percentile. In other words, short-term puts and calls have priced in lower volatility expectations only 20% of the time.

  • Calls have been active on P lately, with the equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.03 outranking 76% of other such readings from the past 52 weeks. However, front-month Pandora Media Inc options can still be had at attractive prices; the current SVI of 50% stands in the tame 24th percentile of its annual range. Technically speaking, P has tumbled more than 42% from March's record peak of $40.44, ending Wednesday's session at $23.23.

  • Options traders have taken a skeptical approach on TMUS, judging by its 10-day ISE/CBOE/PHLX put/call volume ratio of 0.78. This ratio ranks in the 86th percentile of its annual range, as speculative players have shown a greater preference for puts relative to calls only 14% of the time in the last year. Of course, with T-Mobile US Inc down 16.4% in 2014 to trade at $28.11, this skew toward bearish bets isn't too surprising. Meanwhile, short-term volatility expectations are relatively muted, as the SVI for TMUS is a modest 34%, in the 20th annual percentile.


Options Radar: Barrick Gold, CVS Health, and Himax Technologies

Reviewing notable options activity on Barrick Gold Corporation (USA), CVS Health Corp, and Himax Technologies, Inc. (ADR)

by 10/1/2014 2:42 PM
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Three stocks seeing notable options activity today are mining concern Barrick Gold Corporation (USA) (NYSE:ABX), pharmacy chain CVS Health Corp (NYSE:CVS), and semiconductor name Himax Technologies, Inc. (ADR) (NASDAQ:HIMX). Here's a look at how today's options traders have been placing their bets on these three names.

  • Barrick Gold Corporation (USA) (NYSE:ABX) is shrugging off the broad-market headwinds this afternoon, up 1.3% to trade at $14.86. As such, options traders are targeting calls at double the usual intraday pace, and demand for short-term strikes is up, per the stock's 30-day at-the-money (ATM) implied volatility (IV), which has popped 3.2% to 33.8%. However, it's a long-term ABX speculator that's responsible for most of the call volume so far. Specifically, according to Trade-Alert, one bullish bettor bought to open a block of 20,000 January 2017 25-strike calls just after midday. In other words, this speculator -- unlike most of the ones we've seen of late -- sees ABX returning to levels not explored since April 2013 within the next two-plus years.

  • CVS Health Corp (NYSE:CVS) is slightly lower to hover near $79.36, despite a price-target hike to $88 from $83 and an "outperform" rating at Wolfe Research. Elsewhere, options volume is surging, with overall volume running at more than triple what's expected at this point in the session. Also, CVS' 30-day ATM IV is 4.2% higher at 15.7%, as traders set their sights on short-term options. Specifically, it appears bears foresee more downside on the immediate horizon, buying to open the stock's near-the-money weekly 10/10 79-strike put.

  • Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) has shed roughly 6% today, and at last check, was resting at $9.55. Year-to-date, the shares have struggled, losing about 35%. Meanwhile, in the options pits, puts are trading at nearly twice the typical intraday clip, and the security's 30-day ATM IV has tacked on 4.1% to 72.2%, signaling elevated demand for short-term contracts. Digging deeper, traders are gambling on HIMX to move firmly into double-digit territory by month's end, buying to open the equity's weekly 10/31 10.50-strike calls.


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

Option bulls are active amid Petroleo Brasileiro Petrobras SA's (ADR) steep sell-off

by 10/1/2014 2:22 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 Petroleo Brasileiro Petrobras SA (ADR) (NYSE:PBR), as option bulls refuse to throw in the towel on the sinking stock.

Most Active Options Table

Petroleo Brasileiro Petrobras SA (ADR) has sold off sharply this week, ahead of this Sunday's presidential election in Brazil. All told, the shares have plunged 19.2% from last Friday's close -- including today's 6.3% drop to $13.30 -- as a number of polls suggest the incumbent candidate Dilma Rousseff is extending her lead over Socialist Party candidate Marina Silva. In spite of this, call volume is running at a faster-than-usual clip today, and per the stock's 30-day at-the-money implied volatility (IV), which has risen to an annual high of 90.2%, short-term contracts are in demand.

While PBR's November 16 call and put are the most active strikes, it appears they may be tied to stock. Looking elsewhere, the November 19 call has received notable attention, with 6,278 contracts on the tape thus far. Almost all of these changed hands at the ask price, and IV is 4.5 percentage points higher, hinting at the purchase of new positions. At last check, delta on the call was docked at 0.17, suggesting a slim 17% chance of an in-the-money finish at the close on Friday, Nov. 21, when back-month options expire.

From a wider sentiment perspective, today's accelerated call activity marks a change of pace in Petroleo Brasileiro Petrobras SA's (ADR) (NYSE:PBR) options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day put/call volume ratio of 0.47 ranks in the 96th percentile of its annual range, meaning puts have been bought to open over calls with more rapidity just 4% of the time within the past year.


Most Active Weekly Options: Bank of America Corp (BAC)

Weekly put buyers set their sights on Bank of America Corp

by 10/1/2014 12:11 PM
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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. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Bank of America Corp (NYSE:BAC), which has seen a slight uptick in put volume.

Most Active Options Table

Diving right in, Bank of America Corp puts are trading at a slightly faster rate than calls this afternoon. Usually, by this point in the day, call volume more than doubles the number of puts on the tape. What's more, short-term strikes are being targeted, per the stock's 30-day at-the-money (ATM) implied volatility (IV) -- up 3.9% to 23.2%.

BAC's most active option is the ATM weekly 10/3 17-strike put, where 10,283 contracts have been exchanged. Three-quarters have crossed at the ask price, and IV is surging, suggesting the puts are being bought to open. In other words, the traders expect the equity will trend lower through Friday's close, when the weekly options expire, and settle below $17.

Bank of America Corp (NYSE:BAC) is off 0.5% this morning at $16.96. With BAC closing south of the strike price as recently as last Thursday, delta on the aforementioned put is docked at negative 0.55.


Ford Motor Company (F) Trader Bets Big On a Quick Bounce

Ford Motor Company has shed 10% this week amid a number of fundamental woes

by 10/1/2014 11:01 AM
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It's been a terrible week for Ford Motor Company (NYSE:F), with the shares off 10% since last Friday's close to churn near $14.66. Weighing on the stock has been a downwardly revised earnings forecast, a round of bearish brokerage notes, a 3% drop in September sales, and a legal defeat. Option bulls are refusing to throw in the towel on the Detroit darling, though, and today, call volume is running at two times the average intraday pace. Short-term contracts are in high demand, too, per the equity's 30-day at-the-money implied volatility (IV), which is up 1.5% to 26.5% -- in the 94th percentile of its annual range.

Ford's most active option thus far is the October 15 call, where 7,485 contracts have changed hands, due in large part to an early multi-exchange sweep of 6,424 that crossed at an ask price $0.26 apiece, suggesting they were bought. Meanwhile, IV jumped 4 percentage points at the transaction, hinting at the initiation of new positions.

Should Ford Motor Company (NYSE:F) be sitting south of $15 at the close on Friday, Oct. 17, when front-month options expire, the most the speculator stands to lose is the initial cash outlay, or $167,024 (number of contracts * premium paid * 100 shares per contract). However, the options market is pricing in high volatility expectations for Ford over the next several weeks, as evidenced by the equity's Schaeffer's Volatility Index (SVI) of 26%, which ranks higher than 73% of similar readings taken in the past year.


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