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BlackBerry Limited (BBRY) Falters; Put Buying Ramps Up

BlackBerry Ltd (BBRY) has changed course since Friday

by 3/30/2015 12:34 PM
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After adding 1.7% on Friday thanks to better-than-expected fourth-quarter profits, BlackBerry Ltd (NASDAQ:BBRY) is stumbling today, last seen 6.7% lower at $8.82. The dip comes after analysts at Credit Suisse and Deutsche Bank waxed pessimistic on the stock, and JP Morgan Securities lowered its price target to $9 from $10. Interest in puts has since picked up, with the contracts crossing the tape at three times the normal intraday pace.

Specifically, notable activity has been seen at the weekly 4/2 8.50-strike put, which it appears speculators are buying to open. These traders are betting on BBRY to fall below $8.50 by the close this Thursday, when the options cease trading. However, data from the International Securities Exchange (ISE) confirms some put writing at this strike, suggesting another group of short-term speculators is confident the shares will soon find a foothold. Delta on the contracts has jumped to 23% from 7.5% at Friday's close, but this still means the options have a less than 1-in-4 chance of being in the money at expiration.

Traders have been seemingly pessimistic on the equity for a while now. For instance, BBRY's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.44 is only 4 percentage points from an annual high. In other words, puts have been bought to open over calls at an accelerated clip in recent months.

Even with today's struggles, BlackBerry Ltd (NASDAQ:BBRY) has been a long-term outperformer on the charts. Year-over-year, the shares have added 9.2%. Should this uptrend resume, a capitulation of option bears could result in tailwinds.

Daily chart of BBRY since March 2014


Best Buy Co., Inc. (BBY) Short-Term Bulls Step Up

Developments across the border have Best Buy Co Inc (BBY) calls in high demand

by 3/30/2015 12:18 PM
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Best Buy Co Inc (NYSE:BBY) is up 0.8% today at $38.80, after the company announced it will shut down 66 of its Canadian Future Shop stores, and the remaining locations will now operate under the Best Buy brand. In response, call buying has picked up. The contracts are changing hands at twice the normal intraday rate, more than doubling today's put volume.

The most popular option is the weekly 4/2 39-strike call. Signs point to buy-to-open activity, with traders looking for the shares to extend gains above $39 by the close this Thursday, when the weekly series expires.

According to the stock's Schaeffer's put/call open interest ratio (SOIR), it's not rare for short-term speculators to prefer BBY calls over puts. The reading of 0.53 reveals that call open interest largely outweighs put open interest among options expiring within the next three months. Looking back at the past year, near-term options traders have been more call-skewed only 6% of the time.

If Best Buy Co Inc (NYSE:BBY) continues to struggle beneath its year-to-date breakeven mark, though, puts may see more action. Additionally, the shares have underperformed the S&P 500 Index (SPX) during the past three months.


Mylan N.V. (MYL) Traders Take Cues from Abbott Laboratories (ABT)

Mylan NV (MYL) option bears are active after Abbott Laboratories (ABT) reduced its stake

by 3/30/2015 11:23 AM
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The shares of Mylan NV (NASDAQ:MYL) are bucking the broad-market trend higher this morning, and option traders are taking a cue from Abbott Laboratories (NYSE:ABT), which is significantly reducing its stake in MYL. Early put volume is running at nine times the average intraday clip, with speculators gambling on even more downside for MYL over the next few weeks. At last check, the equity is 4.4% lower at $58.92.

Most active by a mile is MYL's April 57.50 put, where more than 5,000 contracts have crossed the tape. It appears traders are buying the puts to open, amid expectations for MYL to breach $57.50 by the close on Friday, April 17, when front-month options expire. The stock bottomed at $57.62 earlier today.

Even before today's bear gap, MYL option traders were buying to open puts over calls at a faster-than-usual clip. The stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 0.73 -- higher than 80% of all other readings from the past year.

In light of today's slide, Mylan NV (NASDAQ:MYL) is testing its mettle atop its 10-week moving average. This trendline, along with its 20-week counterpart, has provided support since mid-October, and lifted MYL to a record high of $65.63 on March 18.

Weekly Chart of MYL since September 2014 with 10-Week and 20-Week Moving Averages


Short-Term Traders Descend On Intrexon Corporation (XON)

Intrexon Corp (XON) is surging on a deal with Merck Serono

by 3/30/2015 11:00 AM
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Intrexon Corp (NYSE:XON) has shot 5.3% higher to $45.26, after the company announced a collaboration with Merck Serono -- the biopharmaceutical business of Merck & Co., Inc. (NYSE:MRK) -- to develop and commercialize various cancer therapies. As such, XON options are flying off the shelves at 10 times the expected intraday pace.

Most active is the April 40 call. It appears traders are both buying to open and selling to close positions here.

Longer term, XON has advanced upwards of 64% on a year-to-date basis. In fact, during the past 60 sessions, the stock has outperformed the broader S&P 500 Index (SPX) by a brow-raising 56 percentage points.

As such, call buying has been in vogue. Intrexon Corp's (NYSE:XON) 10-day call/put volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 13.91 -- with nearly 14 calls bought to open for every put during the past two weeks. Historically speaking, this ratio outstrips more than three-quarters of all comparable readings from the previous year.

Daily Chart of XON since January 2015


Microsoft Corporation (MSFT) Bull Makes a Bold Bet

Calls remain hot, despite Microsoft Corporation's (MSFT) technical troubles

by 3/27/2015 3:02 PM
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Option bulls have set their sights on Microsoft Corporation (NASDAQ:MSFT) in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day call/put volume ratio of 2.13 ranks in the 96th annual percentile. Simply stated, calls have been bought to open over puts at a faster clip just 4% of the time within the past year.

It's a similar set-up in today's trading, with calls crossing the tape at 1.5 times what's typically seen at this point in the day, and outpacing puts by a nearly 2-to-1 margin. The stock's April 46 call is easily the most active option, thanks to a massive block of 20,637 contracts that appears to have been bought to open for $0.02 apiece earlier. If these are indeed new long positions being initiated, the goal is for MSFT to move north of $46 by the close on Friday, April 17 -- when front-month options expire.

Should the shares settle south of the strike at expiration, the most today's call buyer stands to lose is the initial premium paid. Good news for the trader -- the equity's Schaeffer's Volatility Index (SVI) of 20% ranks lower than 79% of similar readings taken in the past 52 weeks. In other words, premium on MSFT's front-month options is pricing in relatively low volatility expectations at the moment.

Technically speaking, Microsoft Corporation (NASDAQ:MSFT) has had a terrible go of it in 2015 -- due in large part to a disastrous turn in the earnings confessional in late January -- down 11.9%. The shares are extending this negative price action today, off 0.8% at $40.90, and on pace for their worst weekly close since Jan. 30.


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