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Options Check-Up: Plug Power Inc, FireEye Inc, and Zillow Inc

Analyzing recent option activity on Plug Power Inc, FireEye Inc, and Zillow Inc

by 10/31/2014 7:45 AM
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Among the stocks attracting attention from options traders lately are fuel cell specialist Plug Power Inc (NASDAQ:PLUG), virtual security firm FireEye Inc (NASDAQ:FEYE), and restaurant chain Zillow Inc (NASDAQ:Z). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on PLUG, FEYE, and Z.

  • Calls have been quite popular on PLUG lately, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The stock's 10-day ISE/CBOE/PHLX call/put volume ratio stands at 38.86 -- not far from its freshly tagged multi-year high of 43.96. Plug Power Inc has vaulted to a gain of 190% in 2014, but has been churning close to the $4.50 level for the past month (and ended Thursday squarely at $4.49). During the coming weeks, speculators are apparently banking on a continuation of this muted price trend. The stock's Schaeffer's Volatility Index (SVI) of 77% ranks in the slim 7th percentile of its annual range, as front-month options have rarely priced in lower volatility expectations.

  • FEYE sports a 10-day call/put volume ratio of 7.36 on the ISE, CBOE, and PHLX, which outranks 84% of comparable readings from the last year -- indicating a stronger-than-usual preference toward bullish bets over bearish during the past couple of weeks. This trend coincides with a bounce higher for FEYE shares, which have gained 35.6% from their Oct. 13 annual low of $24.81, ending Thursday's session at $33.63. Looking ahead, FireEye Inc is set to report third-quarter earnings after the market closes next Tuesday, Nov. 4, but front-month options are still fairly priced. The security's SVI stands at 74%, in the middling 48th annual percentile.

  • Z is also a favorite among call players, having racked up a 10-day call/put volume ratio of 1.51 on the ISE, CBOE, and PHLX. This ratio ranks higher than 88% of other such readings over the past year, pointing to a pronounced bullish skew among speculative players. Traders may be optimistic for a bounce from the century mark, as the $100 level has so far supported the stock's pullback from its July peak of $164.90. In fact, Z shares settled at $104.24 yesterday, up 27.5% year-to-date. Zillow Inc will announce its third-quarter results after the close next Wednesday, Nov. 5, but front-month options aren't exactly pricing in a major move. The stock's SVI checks in at 58%, in the tame 30th annual percentile.


Pre-Earnings Option Bears Target Starbucks Corporation (SBUX)

Starbucks Corporation will report quarterly earnings after tonight's close

by 10/30/2014 2:53 PM
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Option bears have set their sights on Starbucks Corporation (NASDAQ:SBUX) in the months leading up to the company's quarterly earnings report, which is slated for release after tonight's close. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 50-day put/call volume ratio of 1.17 ranks higher than all other readings taken in the past year.

Echoing this preference for puts is the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which ranks higher than 79% of similar readings taken in the past year. Simply stated, short-term speculators are more put-skewed than usual toward SBUX.

In the front-month series, specifically, peak put open interest can be found at the November 72.50 strike, where 4,808 contracts are currently in residence. The majority of positions here have been bought to open in recent months, meaning speculators expect SBUX to retreat south of $72.50 by the close on Friday, Nov. 21, when the options expire.

This accelerated put volume is being continued in today's session, as well, with the contracts crossing the tape at a rate 1.8 times the intraday average. Buy-to-open activity has been detected at the equity's weekly 10/31 75-strike put, as eleventh-hour traders roll the dice on a quick retreat below the $75 mark following tonight's earnings announcement. Should SBUX maintain its perch atop the strike through tomorrow's close -- when the weekly series expires -- the most the speculators stand to lose is the initial premium paid.

Looking back over the past four quarters, SBUX has averaged a modest single-session post-earnings gain of 0.23%. The options market is pricing in a bigger move of 3%, and considering the weekly 10/31 77-strike put is pricing in higher implied volatility than the call (76.2% versus 75.3%), it seems like it is expecting the action to resolve to the downside.

Longer term, Starbucks Corporation (NASDAQ:SBUX) has failed to make any major moves on the charts in 2014, with the shares down 1.3% to trade at $77.36. For the java giant's fiscal fourth quarter, Wall Street is calling for a per-share profit of 74 cents.


Most Active Weekly Options: Gilead Sciences, Inc. (GILD)

Eleventh-hour Gilead Sciences, Inc. traders roll the dice on another record high

by 10/30/2014 1:43 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. 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 biopharmaceutical firm Gilead Sciences, Inc. (NASDAQ:GILD), as eleventh-hour option bulls gamble on a fresh all-time peak.

Most Active Weekly Options Table

After taking a post-earnings dip yesterday, Gilead Sciences, Inc. is up 3% today -- and earlier hit a record high of $114.35 -- after a pair of analysts maintained their bullish stances on the stock. Specifically, S&P Capital IQ reiterated its $150 price target, citing forecasts for "a re-acceleration of Hepatitis C sales driven by Harvoni in the fourth quarter and 2015." Elsewhere, an analyst at Citigroup suggested traders "buy the dip as the destocking in Sovaldi will be compensated by stocking in Harvoni in the fourth quarter ... We continue to expect material upside to consensus estimates in 2015 for Hepatitis C and this drives our conviction in the stock."

Against this backdrop, calls are trading at 1.2 times the average intraday rate, and are outpacing puts by a 2-to-1 margin. A significant portion of the day's action is being driven by eleventh-hour speculators, as five of GILD's 10 most active options expire at tomorrow's closing bell.

Receiving the most attention is the equity's weekly 10/31 115-strike call, which is being bought to open for a volume-weighted average price (VWAP) of $0.56. Based on this average entry price, breakeven for today's call buyers is $115.56 (strike plus the VWAP). Gains will accumulate on a move north of here -- representing a new all-time peak for the shares -- while losses are capped at the premium paid, should Gilead Sciences, Inc. (NASDAQ:GILD) stay south of the strike through tomorrow's close.


Options Radar: Baidu Inc (ADR), Cirrus Logic, Inc., Facebook Inc (FB)

Reviewing notable options activity on Baidu Inc (ADR), Cirrus Logic, Inc., and Facebook Inc

by 10/30/2014 11:25 AM
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Option traders have taken a shine to Chinese Internet issue Baidu Inc (ADR) (NASDAQ:BIDU), Apple Inc. (NASDAQ:AAPL) supplier Cirrus Logic, Inc. (NASDAQ:CRUS), and social networking titan Facebook Inc (NASDAQ:FB). Here's a look at how speculators have been placing their bets on BIDU, CRUS, and FB today.

  • Baidu Inc (ADR) (NASDAQ:BIDU) rocketed to a record high of $237.55 out of the gate, but has trimmed its lead to 4.2% to flirt with $233.90. The company -- often called the "Google of China" -- touted a "very strong" third quarter (subscription required), thanks to a surge in mobile traffic. As such, Pacific Crest, Barclays, and Piper Jaffray all upped their price targets on BIDU, and option traders are in a tizzy. Intraday options volume is running at four times the typical pace, and eight of the 10 most active contracts expire at tomorrow's closing bell. What's more, calls are outpacing puts -- a deviation from the norm. The stock's weekly 10/31 235- and 237.50-strike calls have seen a mix of buying and selling activity, and volume has surpassed open interest at both strikes, hinting at fresh eleventh-hour bets.

  • Despite reporting stronger-than-expected fiscal second-quarter earnings and offering up a solid current-quarter forecast, Cirrus Logic, Inc. (NASDAQ:CRUS) has dropped 10.2% to $19.68. The shares initially ticked higher in after-hours trading, but are now back below their 200-day moving average, landing on the short-sale restricted list. As such, bears are heading to the options pits, picking up CRUS puts at 10 times the average intraday rate. Furthermore, puts are outpacing calls by a margin of more than 2-to-1, marking a significant shift in sentiment among buyers. Digging deeper, skeptics are apparently buying to open weekly 10/31 21- and 21.50-strike puts, amid expectations for CRUS to extend its plunge through tomorrow's close, when the options expire.

  • Finally, Facebook Inc (NASDAQ:FB) is extending yesterday's post-earnings swoon, down 3.3% at $73.35, bringing its weekly drop to 9.1%. Options traders are rushing to place bets on the stock's end-of-week trajectory, with intraday volume running at twice the average rate. The security's 30-day at-the-money implied volatility has jumped 12% to 33.1%, and eight of the 10 most active options expire tomorrow night, underscoring a growing affinity for short-term contracts. Upon closer inspection, it looks like bulls are buying to open the weekly 10/31 74.50- and 76-strike calls, on hopes for FB to rebound north of the strikes by the end of the week. Meanwhile, the weekly 10/31 75-strike call has seen a mix of buy- and sell-to-open activity.


Most Active Options Update: Intel Corporation (INTC)

Put players are targeting Intel Corporation today

by 10/30/2014 10:56 AM
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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 chipmaker Intel Corporation (NASDAQ:INTC), as both long- and short-term traders brace for additional losses.

Most Active Options Table

Intel Corporation is off 2.7% today -- the biggest loser on the Dow thus far -- amid a sector-wide slump in semiconductor stocks. The quick move to the downside has prompted a rush of put activity in the equity's options pits, with volume running at two times the average intraday pace. Diving deeper reveals both short- and long-term traders are rolling the dice on steeper losses for INTC.

Short-term option bears have set their sights on the stock's weekly 10/31 33.50-strike put, where 9,718 contracts have changed hands -- mostly at the ask price, hinting at buyer-driven activity. Implied volatility is up 15.5 percentage points, and only 1,842 contracts reside here, making it safe to assume new positions are being initiated (a theory echoed by Trade-Alert). Based on INTC's current perch at $32.98, the puts are in the money. According to the option's delta of negative 0.79, there's a strong probability INTC will be docked south of the strike at tomorrow's close, when the weekly series expires.

Receiving the most attention thus far, though, is INTC's January 2015 32-strike put, where 11,326 contracts have crossed the tape. The majority of this action occurred when a block of 9,173 contracts appears to have been bought to open for $1.04 apiece, resulting in an initial net debit of about $954,000 (number of contracts * premium paid * 100 shares per contract). This is the most the put buyer stands to lose, should the security be north of the strike when the January options expire. Gains, meanwhile, will accumulate on a move south of breakeven at $30.96 (strike less premium paid).

Today's accelerated put activity marks a change of pace in Intel Corporation's (NASDAQ:INTC) options pits -- with call buying growing increasingly popular in recent weeks amid the stock's attempt to rebound from its post-earnings plunge. In fact, since the company reported earnings on Oct. 14, INTC's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio has risen to 2.70 from 1.89, and is now ranked in the bullishly skewed 69th percentile of its annual range.


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