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JA Solar Holdings Co., Ltd. (ADR) (JASO) Bulls Bet On an Earnings Win

JA Solar Holdings Co., Ltd. (ADR) will report earnings ahead of Wednesday's open

by 8/18/2014 2:34 PM
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JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) has a history of performing well in the wake of its earnings reports, and today's option traders are betting on more of the same. At last check, JASO calls are trading at more than three times the average intraday rate, and are outpacing puts by a roughly 2-to-1 margin.

Drilling down, buy-to-open activity has been detected at the September 9 put, where 1,606 contracts are on the tape. Based on JASO's present price of $9.37, these calls are just barely in the money. However, in order for traders to profit at the close on Friday, Sept. 19 -- when front-month options expire -- the shares need to be sitting above $9.54 (strike plus the volume-weighted average price of $0.54).

Profit for today's call buyers will accumulate on a move north of here, while losses are capped at 100% of the premium paid, should JASO settle south of the strike at expiration. Considering the stock's Schaeffer's Volatility Index (SVI) of 59% ranks lower than 85% of similar readings taken in the past year, the speculators can rest easy knowing they placed these front-month bets at a relative bargain.

As noted, JASO will take its turn in the earnings confessional ahead of Wednesday's open, and the equity's historical post-earnings price action tends to favor bulls. In fact, despite falling short of analysts' bottom-line estimates in five of the past eight quarters, JASO has averaged a gain of 4.7% in the session subsequent to reporting -- skewed a bit by its single-day 70.4% rally following its May 2013 results.

Elsewhere on the fundamental front, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) announced upbeat test results of its RIECIUM solar photovoltaic (PV) module. Wall Street is taking kindly to the news, sending shares of JASO up 3.5% this afternoon.


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Most Active Options Update: 3D Systems Corporation (DDD)

One options trader is betting on a breakout from 3D Systems Corporation

by 8/18/2014 1:43 PM
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The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that 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 is 3D Systems Corporation (NYSE:DDD), as one trader bets on a high-volatility breakout over the next three months.

Most Active Options Table

Just after midday, 3D Systems Corporation was the subject of an intermediate-term volatility play. Specifically, it appears as though a speculator purchased a block of 1,000 November 49 puts at $5.65 each, and simultaneously bought a matching block of 1,000 November 49 calls for $3.85 apiece. Open interest exceeds volume at both strikes, but a review of the historical volume data suggests this could be the initiation of a new long straddle on DDD.

If so, the net debit on the play was $9.50. This means, at expiration, the straddle buyer will be able to net a profit if DDD is trading above the upper breakeven at $58.50 (strike price plus net debit) or below the lower breakeven at $39.50 (strike price minus net debit). In today's session, DDD is off 0.4% to trade at $48.73 -- nearly flat with the focus strike. Based on the stock's current price, the straddle buyer needs the shares to either rally more than 20%, or fall more than 18.9%.

Though the November 49 put carries less than one point of intrinsic value, it's considerably more expensive than its call counterpart. That's because the November 49 put was pricing in implied volatility (IV) of 57.5% at the time of the spread transaction, compared to IV of 38.0% for the November 49 call. This dramatic skew suggests speculators are placing greater odds on DDD breaking out to the downside than the upside over the next three months.

While the company has yet to confirm an official date, third-quarter earnings from 3D Systems Corporation are typically released in late October. These quarterly events have served as the catalyst for big moves in DDD before, and today's straddle buyer could be looking for history to repeat itself. For example, after the firm's April 2013 announcement, DDD notched a gain of 20.7% in the ensuing week. On the other hand, the July 2014 results preceded a one-week slide of 14.8%.

Technically speaking, now is an opportune time to open a straddle on 3D Systems Corporation (NYSE:DDD). The stock has spent the past week in a tight range between the $48 and $50 levels -- a disappointing development for last Tuesday's crop of eleventh-hour call buyers. However, DDD could soon be due for a drastic move out of this sideways channel.


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Options Radar: Micron Technology, Dick's Sporting Goods, and TASER

Reviewing notable options activity on Micron Technology, Inc., Dick's Sporting Goods Inc, and TASER International, Inc.

by 8/18/2014 12:30 PM
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Three names seeing notable option activity today are semiconductor concern Micron Technology, Inc. (NASDAQ:MU), athletic apparel retailer Dick's Sporting Goods Inc (NYSE:DKS), and stun-gun maker TASER International, Inc. (NASDAQ:TASR). Here's a look at how today's option traders have been placing their bets on MU, DKS, and TASR.

  • Micron Technology, Inc. (NASDAQ:MU) is following the broader equities market into the black, up 1.1% at $31.83. The shares have advanced 46.3% so far in 2014, and option traders today are gambling on even more upside for MU this week. The equity's weekly 8/22 31.50-strike call is the most active option so far, with speculators buying the contracts to open amid hopes for an extended advance north of $31.50 through Friday's close. In light of MU's uptick today, delta on the call has jumped to 0.62 from 0.51 at Friday's close, suggesting about a 62% shot of expiring in the money at the end of the week.

  • Dick's Sporting Goods Inc (NYSE:DKS) is up 0.7% at $43.25, and the stock's short-term options are flying off the shelves ahead of the company's turn in the earnings confessional tomorrow morning. In fact, the security's 30-day at-the-money (ATM) implied volatility (IV) touched a 52-week high earlier in the session, and was last seen 7.5% higher at 39.1%. Digging deeper, puts are trading at 11 times the intraday norm, and it looks like one bear may be rolling down his position by selling to close September 38 puts, and buying to open September 37 puts.

  • TASER International, Inc. (NASDAQ:TASR) has added 8.3% to $15.06, bringing its month-to-date gain to nearly 25%, as hopes for the company's body-mounted cameras escalate in the wake of the situation in Ferguson, Missouri. Overall option volume is running at nine times the typical intraday pace, though calls are outpacing puts by a more than 2-to-1 margin. The equity's 30-day ATM IV has popped 9.2%, pointing to an escalating demand for short-term contracts, and buy-to-open activity has been detected at the stock's out-of-the-money September 16 call. By purchasing the newly front-month calls to open, the speculators expect TASR to surmount $16 -- territory not charted since early May -- by the close on Friday, Sept. 19, when the options expire.

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Bulls Rally as Apple Inc. (AAPL) Lingers Near Annual-High Territory

Apple Inc. calls are trading at an accelerated clip today

by 8/18/2014 11:14 AM
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Apple Inc. (NASDAQ:AAPL) option players have shown a distinct preference for bullish bets over bearish of late, as the stock hovers just shy of annual-high territory. 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 2.62 ranks in the 98th percentile of its annual range. Simply stated, calls have been bought to open over puts with more rapidity just 2% of the time within the past year.

In today's session -- with AAPL last seen trading at $98.91, less than 1 point away from its July 29 52-week peak of $99.44 -- call volume is running at a 54% mark-up to what's typically seen at this point in the day. Most active are AAPL's weekly 8/22 98- and 100-strike calls, where a collective 60,241 contracts have changed hands -- mostly at the ask price, hinting at buyer-driven activity. IV is up at both strikes, and volume outstrips open interest at the lower-strike call, making it safe to assume new positions are being initiated.

The in-the-money 98-strike calls are being purchased for a volume-weighted average price (VWAP) of $1.17, making breakeven at this Friday's close -- when the options expire -- $99.17 (strike plus VWAP). Meanwhile, breakeven for the out-of-the-money 100-strike calls is $100.33 (strike plus VWAP of $0.33). Not only does this represent a new annual high for AAPL, but it sits just 0.4% south of the security's record peak of $100.72, tagged on Sept. 21, 2012. Gains for both sets of option traders are theoretically unlimited beyond the respective breakeven marks, while losses are limited to the initial premium paid, should Apple Inc. (NASDAQ:AAPL) settle south of the strikes at week's end.


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Most Active Options Update: MannKind Corporation (MNKD)

MannKind Corporation option bulls are betting on a strong performance this week

by 8/18/2014 10:50 AM
Stocks quoted in this article:

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 is MannKind Corporation (NASDAQ:MNKD), as call volume on the biotech stock is elevated to start the week.

Most Active Options Table

More than 9,600 calls changed hands on MannKind Corporation during the first hour of today's session, representing 1.14 times the expected intraday volume. The most active option is the weekly 8/22 7-strike call, where 2,421 contracts have crossed the tape.

With only 778 contracts in open interest at this short-term option, it's safe to assume new calls are being opened here today. Plus, 77% of the volume has traded at the ask price, and implied volatility rose as some of the day's big block trades changed hands -- so it looks as though speculative players are initiating new bullish bets on MNKD today.

Based on the option's volume-weighted average price (VWAP) of $0.21, breakeven at this Friday's close will be $7.21 (strike price plus VWAP). At last check, MNKD is up 2.6% to trade at $7.04, so today's short-term option bulls are betting on the shares to gain more than 2.4% by week's end.

Last week brought some major fundamental developments for MNKD, including a deal with Sanofi SA (ADR) (NYSE:SNY) that could be worth up to $925 million. That news helped to overshadow a wider-than-forecast second-quarter loss for MNKD.

On the charts, MannKind Corporation (NASDAQ:MNKD) is in the process of bouncing from its 200-day moving average. The stock could now be establishing support atop the $7 level, which previously served as resistance back in April.


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