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Most Active Weekly Options: Micron Technology, Inc. (MU)

Micron Technology, Inc. hit yet another decade-plus high today

by 11/26/2014 1:53 PM
Stocks quoted in this article:

The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those 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 Micron Technology, Inc. (NASDAQ:MU), with call volume doubling put volume this afternoon.

Most Active Weekly Options Table

As alluded to, Micron Technology, Inc. calls are more popular than their put counterparts today, as seven of the 10 most active strikes are calls. Nevertheless, the most active weekly option -- and the third most active MU option overall -- is the 12/5 35-strike put, where more than 4,000 contracts have crossed the tape.

These contracts aren't necessarily of the bearish variety, though. About 91% of the volume at the weekly strike has traded at the bid price, and volume outstrips open interest, suggesting traders may be writing to open these positions. In fact, data from the International Securities Exchange (ISE) confirms some sell-to-open activity.

Long story short, these sellers anticipate MU will maintain its perch atop $35 through the close next Friday, when the weekly series expires. Delta on the put is currently hovering at negative 0.44, meaning the options market is giving the contract a less than 1-in-2 chance of being in the money at expiration.

This probability was slightly higher last night, when delta was negative 0.54, but has declined on the equity's intraday gains. Micron Technology, Inc. (NASDAQ:MU) has tacked on 1.1% this afternoon to trade at $35.19, bringing its year-to-date advance to nearly 62%. What's more, the outperforming shares touched yet another 12-year high of $35.29 in mid-morning trading.


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Calls Hot as TASER International, Inc. (TASR) Soars

TASER International, Inc. calls are trading at eight times the intraday average

by 11/26/2014 12:13 PM
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TASER International, Inc. (NASDAQ:TASR) is up 6.6% -- and earlier hit a nine-year high of $22.35 -- after North Carolina's Winston-Salem Police Department upped its order with the company. Option traders are responding in kind, with calls trading at eight times the intraday average, and outpacing puts by a 9-to-1 ratio.

Most active is the equity's December 23 call, where 2,627 contracts are on the tape. The majority of these have changed hands at the ask price, implied volatility is up 2 percentage points, and volume outstrips open interest, making it safe to assume new positions are being purchased.

The volume-weighted average price (VWAP) for the calls is $0.55, making at-expiration breakeven $23.55 (strike plus VWAP) -- territory not charted by TASR since January 2005. Gains will accrue north of here, while losses are capped at the initial premium paid, should the stock settle south of the strike at expiration.

However, with a significant portion of the equity's float dedicated to short interest, the activity at this out-of-the-money strike could be at the hands of shorts hedging against any additional upside. Regardless of the reason, premium on the equity's front-month options is relatively inexpensive at the moment. Specifically, TASER International, Inc.'s (NASDAQ:TASR) Schaeffer's Volatility Index (SVI) of 47% ranks lower than 70% of similar readings taken in the past year.


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BlackBerry Ltd Traders Count On Technical Support

BlackBerry Ltd announced a new iPhone trade-in program this morning

by 11/26/2014 10:18 AM
Stocks quoted in this article:

Short-term contracts were targeted in BlackBerry Ltd's (NASDAQ:BBRY) options pits yesterday. In fact, eight of the 10 most active strikes will expire within the next six weeks.

Looking more closely, traders showed a particular affinity for BBRY's weekly 11/28 10-strike and 12/5 9.50-strike puts, where a collective 3,538 contracts changed hands. The vast majority did so at the bid price, and open interest soared overnight at both strikes, making it safe to assume at least some of the out-of-the-money contracts were sold to open. This theory is corroborated by data from the International Securities Exchange (ISE).

In short, these put writers expect BBRY to maintain its footing atop the strikes through the respective expiration dates, at the end of this week and next week. To put things in perspective, delta on the higher-strike contract is negative 0.094, while delta on the lower is negative 0.086 -- signifying a less than 1-in-10 chance either option will be in the money at expiration.

This morning, BlackBerry Ltd (NASDAQ:BBRY) is 0.6% higher at $10.42, following the company's announcement that it will offer customers up to $550 to trade in their Apple Inc. (NASDAQ:AAPL) iPhones in exchange for the new BBRY Passport smartphone. Longer term, the shares have advanced more than 40% year-to-date.


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Short-Term Bulls Target Priceline Group Inc (PCLN)

The weekly 11/28 series was popular in Priceline Group Inc's options pits yesterday

by 11/26/2014 9:37 AM
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Priceline Group Inc (NASDAQ:PCLN) gained 1.6% yesterday to settle at $1,179.17, bringing the shares above their year-to-date breakeven mark. Meanwhile, the stock's 30-day at-the-money implied volatility (IV) spiked 4.1% to 20.1%, suggesting short-term contracts were once again in demand.

A closer look reveals this is true. In fact, each of PCLN's 10 most active options expires at this Friday's close. In the lead was the weekly 11/28 1,170-strike call, where 1,713 contracts changed hands -- the majority at the ask price, pointing to buyer-driven activity. What's more, IV edged slightly higher, and open interest rose overnight, suggesting newly bought bullish bets.

Breakeven for the buyers at Friday's close is $1,177.66, or the strike plus the volume-weighted average price of $7.66. In other words, yesterday's traders are already staring at potential paper profits. Gains are theoretically unlimited north of breakeven, while losses are capped at the initial premium paid, should Priceline Group Inc (NASDAQ:PCLN) retreat below the strike by week's end.


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Options Check-Up: Citigroup Inc, Toll Brothers Inc, Under Armour Inc

Analyzing recent option activity on C, TOL, and UA

by 11/26/2014 7:53 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are financial behemoth Citigroup Inc (NYSE:C), housing concern Toll Brothers Inc (NYSE:TOL) and athletic apparel issue Under Armour Inc (NYSE:UA). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on C, TOL, and UA.

  • It's been a mild year for C on the charts, as yesterday's 0.1% loss brought it to $54.33 -- just 4 percentage points above its year-to-date breakeven level. In the stock's options pits, speculators are mostly of the bearish variety. For example, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Citigroup Inc's 10-day put/call volume ratio of 0.54 ranks in the 74th annual percentile, showing puts have been bought to open over calls at a faster-than-normal rate in the past two weeks. On a volatility basis, C's near-term options are attractively priced, according to its Schaeffer's Volatility Index (SVI) of 13% -- only 4 percentage points from an annual low.

  • Like Citigroup, TOL is hovering near its year-to-date breakeven mark, and yesterday closed 0.6% lower at $34.94. Over the last 50 sessions, option traders have been betting on a move to the upside. Specifically, at the ISE, CBOE, and PHLX, for each Toll Brothers Inc put bought to open, traders have picked up 7.35 calls. What's more, calls have been bought to open at a faster pace only 12% of the time in the past year. The equity's short-term options are on the inexpensive side, with its SVI of 26% landing in the 31st annual percentile.

  • UA has been a strong mover on the charts, adding 74.2% year-over-year, including a gain of 1% yesterday to finish at $70.67. Somewhat surprisingly, several analysts remain uncertain about Under Armour Inc, with 12 out of 24 covering firms handing out "hold" or worse ratings. There appears to be room for analyst upgrades to push the equity even higher, should it continue its uptrend -- which is exactly what many options traders expect. At the ISE, CBOE, and PHLX, UA's 10-day call/put volume ratio of 3.24 ranks in the 90th annual percentile. The security's near-term options are near bottom-dollar, according to its SVI of 26%, in the 9th percentile of its annual range.


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