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Calls Hot as FireEye, Inc. (FEYE) Soars

FireEye Inc (FEYE) is bucking the broad-market trend lower today

by 1/30/2015 1:37 PM
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Amid reports indicating the Senate may fast-track a cybersecurity bill, shares of FireEye Inc (NASDAQ:FEYE) have managed to buck the broad-market trend lower today. At last check, the stock was up 5.3% to trade at $34.48, and options traders are gambling on FEYE to extend this momentum over the next several weeks.

Taking a quick step back, calls are trading at 1.8 times the average intraday rate, and are outpacing puts by a more than 5-to-1 margin. Most active is the February 32.50 call, where it appears new positions are being purchased. Thanks to today's surge, delta on the call has jumped to 0.66 from 0.55 at last night's close, reflecting a greater probability the option will expire in the money at the close on Friday, Feb. 20.

Today's affinity for short-term calls over puts marks a change of pace in the equity's options pits. In fact, FEYE's Schaeffer's put/call open interest ratio (SOIR) of 0.93 ranks in the 96th annual percentile. Simply stated, near-term traders have been more put-focused just 4% of the time within the past year. Should the security continue to rally, an unwinding of the hedges related to these put positions could create tailwinds.

Technically speaking, FireEye Inc (NASDAQ:FEYE) has started the year out on a strong note, up 9.2%. What's more, the equity has recently found a foothold atop its 32-week moving average -- a trendline that served as resistance in November, but now appears to have switched to a more supportive role.


Gulf Resources, Inc. (GURE) Rally Triggers Bullish Betting

Gulf Resources, Inc. (GURE) has more than doubled today, but is facing familiar resistance

by 1/30/2015 11:17 AM
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China-based commodity concern Gulf Resources, Inc. (NASDAQ:GURE) has more than doubled today, up 130% at $2.70, after the firm said it discovered natural gas resources at a Sichuan bromine well. Against this backdrop, option bulls are flocking to GURE in droves, gambling on even more upside for the equity.

Intraday call volume is running at nearly 300 times the norm, and has more than doubled GURE put volume thus far. The now in-the-money 2.50 strike is a hot bet, with buy-to-open action detected at the February-, April-, and July-dated calls. By purchasing the contracts to open, the buyers expect GURE to continue its ascent north of $2.50 through the options' respective lifetimes.

In light of today's surge, delta on the February 2.50 call has skyrocketed to 0.59 from 0.11 at yesterday's close, reflecting the growing odds of the contract expiring in the money on Friday, Feb. 20. Likewise, delta on the April 2.50 call has soared to 0.61 from 0.17, and delta on the July 2.50 call sits at 0.65, compared to 0.22 last night.

Today's appetite for bullish bets on GURE marks a change of pace among short-term option players. The security's Schaeffer's put/call open interest ratio (SOIR) of 1.06 sits just 3 percentage points from an annual peak, implying that near-term speculators are more put-heavy than usual right now.

Just last month, Gulf Resources, Inc. (NASDAQ:GURE) touched an annual low of $1. Today, the security's upside momentum stalled in the $2.85 area, which has contained GURE's rally attempts on several occasions over the past few years.

Weekly Chart of GURE since July 2011


How One Trader Upped the Ante On The Boeing Company (BA)

Boeing Co (BA) calls were in high demand yesterday

by 1/30/2015 10:02 AM
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Boeing Co (NYSE:BA) finished 5.8% higher yesterday -- and also touched an all-time high of $148.25 -- thanks to a rush of positive analyst attention following Wednesday morning's fourth-quarter earnings beat, and news that its 747-8 airliner was chosen to be the new model for Air Force One. Specifically, no fewer than six brokerage firms raised their price targets. These positive developments created a flurry of activity in the stock's options pits, with calls trading at four times normal intraday rates.

Looking at the data reveals one trader who appears to have sold to close a 2,168-contract block of February 138 calls and used the proceeds to fund a more ambitious bet, rolling her position up and out. Specifically, she apparently bought to open 4,405 March 150 calls. This trader expects yesterday's momentum to push BA over $150 by the close on Friday, March 20, when back-month contracts expire -- though the shares are down 1.7% this morning at $145.26.

Longer term, speculators have been more skeptical of BA. The security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.66 is higher than 90% of all readings taken in the past year.

On the other hand, as alluded to earlier, the brokerage firms following BA have taken a more bullish position. Of the 17 analysts covering the shares, 12 rate them a "strong buy," versus five "holds" and not a single "sell."

This positive outlook could be due in part to Boeing Co's (NYSE:BA) technical strength. Since the equity touched an annual low of $116.32 in October, it has seen a 25% increase, helped recently by a bounce from its 80-day moving average.

Daily Chart of BA Since  December 2014 with 40-week Moving Average


Options Check-Up: Baidu, Inc., Qihoo 360 Technology, and SINA Corp

Analyzing recent option activity on Baidu Inc (ADR) (BIDU), Qihoo 360 Technology Co Ltd (QIHU), and SINA Corp (SINA)

by 1/30/2015 8:32 AM
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Among the stocks attracting attention from options traders lately are Chinese Internet providers Baidu Inc (ADR) (NASDAQ:BIDU), Qihoo 360 Technology Co Ltd (NYSE:QIHU), and SINA Corp (NASDAQ:SINA). Below, we'll break down how options traders are positioning themselves, and how much speculators are willing to pay for their bets on BIDU, QIHU, and SINA.

  • BIDU has taken a breather since notching an all-time high of $251.99 in mid-November, settling at $220.39 yesterday. Off the charts, Baidu Inc entered a strategic collaboration with audio and electronic systems manufacturer Harman International Industries (NYSE:HAR). Despite the stock's pullback to support in the $220 region -- and unlike just a few weeks ago -- sentiment in the options pits and amongst the brokerage bunch is majorly bullish. All 12 analysts covering BIDU rate the stock a "strong buy," and its 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 2.17 sits in the 86th percentile of its annual range. From a historical standpoint, traders are paying a fair price for their near-term bets on BIDU, per its Schaeffer's Volatility Index (SVI) of 40%, which is in the 43rd percentile of all similar readings taken over the past year.

  • Shares of QIHU dropped 1.8% yesterday, to land at $59.10. On a year-to-date basis, though, the equity remains 3.2% higher. Presently, sentiment in the options pits runs counter to the analyst community. Qihoo 360 Technology Co Ltd's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.72 reads in the bearishly skewed 84th percentile of its annual range, while eight out of nine covering analysts rate the stock a "strong buy." Short-term options for QIHU are currently available for bottom-of-the-barrel prices, with its SVI of 43% sitting in the 12th percentile of all annual readings.

  • SINA has been a long-term laggard, shedding about 46% year-over-year to reach $36.24, and hitting an annual low of $34.89 earlier this month. Accordingly, sentiment in SINA Corp's options pits is nearing a bearish apex, with the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.29 sitting just 3 percentage points away from a pessimistic peak. Near-term bets on the stock are priced at a bargain, with its SVI of 36% sitting in the 14th percentile of its annual range.


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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