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Most Active Weekly Options: Tesla Motors Inc (TSLA)

Tesla Motors Inc option bears are gambling on a short-term slide

by 11/20/2014 1:23 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 Tesla Motors Inc (NASDAQ:TSLA), where traders are rolling the dice on a short-term stumble.

Most Active Weekly Options Table

Tesla Motors Inc is in recovery mode today -- up 0.3% at $248.44 -- after slumping nearly 4% yesterday following a pair of mixed analyst notes from Morgan Stanley. Today's rebound comes after Global Equities Research waxed optimistic on the electric car concern, saying the stock's recent pullback has created a buying opportunity. Additionally, the brokerage firm reiterated its "overweight" rating and $385 price target -- territory yet to be charted by the shares.

In the options pits, calls and puts are trading neck and neck this afternoon, with roughly 26,000 contracts seen on either side of the aisle. Most active is TSLA's November 250 call, which is seeing a mix of buying and selling activity ahead of tomorrow night's front-month expiration. Meanwhile, on the put side, the stock's weekly 11/28 245 strike has received the most attention, with 3,424 contracts on the tape.

A healthy portion of these puts have traded at the ask price and volume outstrips open interest, suggesting some of today's activity is of the buy-to-open kind. Traders' profit will accumulate on a move south of breakeven at $241.90 (strike less the volume-weighted average price of $3.10), while losses are limited to the initial cash outlay, should TSLA settle north of the strike at next Friday's 1:00 p.m. ET close, when the series expires.

From a wider sentiment perspective, long puts have been preferred over calls. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 50-day put/call volume ratio of 0.93 ranks just 9 percentage points from an annual bearish peak. Good news for these put buyers -- as my colleague Alex Eppstein noted yesterday -- Tesla Motors Inc's (NASDAQ:TSLA) short-term options are relatively inexpensive at the moment.


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Options Radar: Yahoo! Inc., T-Mobile US Inc, and Lululemon Athletica

Reviewing notable options activity on Yahoo! Inc., T-Mobile US Inc, and Lululemon Athletica inc.

by 11/20/2014 12:56 PM
Stocks quoted in this article:

Option traders have taken a shine to Internet titan Yahoo! Inc. (NASDAQ:YHOO), wireless provider T-Mobile US Inc (NYSE:TMUS), and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Here's a look at how speculators have been placing their bets on YHOO, TMUS, and LULU.

  • Yahoo! Inc. (NASDAQ:YHOO) is 2.7% higher at $51.96 -- not far from another 14-year high -- on news the company ousted Google Inc (NASDAQ:GOOGL) as the default search engine for Mozilla's Firefox, breaking up a 10-year partnership. CEO Marissa Mayer said the five-year deal -- which kicks off next month -- should help YHOO gain search market share. In addition, YHOO may be getting an added lift from Alibaba Group Holding Ltd (NYSE:BABA) -- of which YHOO owns a stake -- on solid demand for the Chinese e-commerce concern's inaugural bond sale. Against this backdrop, YHOO calls are trading at a 50% mark-up to the average intraday pace, and the stock's 30-day at-the-money (ATM) implied volatility (IV) has jumped 4.2%, reflecting an affinity for short-term contracts. Digging deeper, it looks like traders are buying to open the November 52 and 53 calls, hoping YHOO extends today's rally north of these strikes by tomorrow's close, when front-month options expire.

  • T-Mobile US Inc (NYSE:TMUS) is 1.6% higher at $27.89, after Deutsche Telekom -- TMUS' majority owner -- CEO Timotheus Hoettges waxed optimistic on the prospects of attracting another suitor. In mid-October, TMUS tumbled into annual-low territory south of $25, after France's Iliad jilted the U.S. carrier. In options land, TMUS calls are trading at nine times the typical intraday rate, and have outnumbered puts by a margin of more than 23-to-1. Most of the action transpired at the out-of-the-money February 30 call, where two blocks totaling 4,350 contracts traded around the same time this morning. Both crossed on the ask side, and volume exceeds open interest at the strike, hinting at newly bought bullish bets. By purchasing the calls to open, the buyers expect TMUS to climb north of $30 -- in territory not charted since mid-September -- by the close on Friday, Feb. 20, when the options expire.

  • Finally, Lululemon Athletica inc. (NASDAQ:LULU) is up 2.6% to $46.78 on no apparent news. The equity has tacked on nearly 4% so far this week, and is on pace for its loftiest settlement since late April. In the options arena, it looks like some bulls are taking profits in the wake of LULU's run higher. Intraday call volume is running at twice the average rate, with potential sell-to-close action detected at the in-the-money December 42.50 call -- the most active contract thus far. Plenty more bulls could liquidate their winning positions, too; the security's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 3.67 -- just 8 percentage points from an annual peak.

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Option Traders Split On Volatile Caesars Entertainment Corp (CZR)

Caesars Entertainment Corp saw a rush of short-term option buying yesterday

by 11/20/2014 10:30 AM
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Caesars Entertainment Corp (NASDAQ:CZR) has spiked more than 12% out of the gate, following news of an $18.4 billion restructuring plan. This comes just a day after the stock fell 6.2%. Also on Wednesday, calls traded at roughly 1.3 times the expected rate, with plenty of speculators initiating positions.

CZR's two most active strikes yesterday were the November 13.50 put and 14.50 call. The vast majority of the contracts crossed at the ask price, and nearly all of them translated into open interest overnight, making it safe to assume the bets were bought to open.

Today's massive rally -- which has CZR sitting at $16.17 -- is bad news for the put traders, and good news for the call buyers. The former group anticipated the shares would breach $13.50 by week's end, when the front-month contracts expire -- a prospect that's looking increasingly unlikely.

By contrast, the call buyers appear to be in great shape. Delta on the now in-the-money contract has spiked to 0.71 from 0.48 at last night's closing, suggesting a 71% chance the call will be in the money at tomorrow's close. What's more, these speculators paid a volume-weighted average price of $0.55 for their bets, and the bid price on the call is now $1.45 -- indicating paper profits are on the table for those that want to close out their positions today.

As alluded to, Caesars Entertainment Corp (NASDAQ:CZR) announced a major restructuring effort last night, as the firm attempts to prepare for its impending bankruptcy filing. If the plan takes effect, the company's biggest unit -- Caesars Entertainment Operating Co. -- would convert into a real estate investment trust (REIT).


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Most Active Options Update: Bank of America Corp (BAC)

Option bulls are beginning to take note of Bank of America Corp's recent uptrend

by 11/20/2014 10:30 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 today is financial firm Bank of America Corp (NYSE:BAC), where option bulls are beginning to climb on board.

Most Active Options Table

Option bears have targeted Bank of America Corp in recent months, as evidenced by the stock's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.28, which ranks in the 96th percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster pace just 4% of the time within the past year.

Today, however, it's call players that have set their sights on the banking giant. Specifically, calls are trading at 1.5 times what's typically seen at this point in the day, and are outpacing puts by a 4-to-1 margin. What's more, traders are showing a preference for short-term contracts, per the stock's 30-day at-the-money implied volatility (IV), which is up 3.5% to 16.8%.

Most active by a mile is BAC's November 17 call, where 19,316 contracts have changed hands. The majority of these have gone off on the ask side, and IV has surged 7.2 percentage points, hinting at the possibility new positions are being purchased. Data from the ISE confirms that at least a portion of this morning's activity is of the buy-to-open kind. Profit for today's traders is theoretically unlimited to the upside, while losses are capped at the initial cash outlay, should BAC settle south of the strike at tomorrow's close, when the front-month contracts expire.

On the charts, Bank of America Corp (NYSE:BAC) has been in rally mode since taking a sharp bounce off its 120-day moving average in mid-October, with the shares up 10% to trade at $16.98. Should the equity continue to make headway, a further shift in sentiment among option traders could help propel the shares higher.


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Options Check-Up: Advanced Micro Devices, Marvell, and Sirius XM

Analyzing recent option activity on AMD, MRVL, and SIRI

by 11/20/2014 8:14 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are semiconductor stocks Advanced Micro Devices, Inc. (NYSE:AMD) and Marvell Technology Group Ltd. (NASDAQ:MRVL), as well as streaming content provider Sirius XM Holdings Inc. (NASDAQ:SIRI). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMD, MRVL, and SIRI.

  • AMD lost 0.8% yesterday to close at $2.63, bringing its year-to-date deficit to 32%. Nevertheless, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than 34 calls for every put during the past two weeks. The resultant call/put volume ratio of 34.26 ranks in the 94th percentile of its annual range, suggesting a healthier-than-usual appetite for bullish bets over bearish -- a dramatic shift from how speculators were wagering a month ago. However, some of these positions may have been at hands of short sellers hedging against unexpected upside, as 22.2% of Advanced Micro Devices, Inc.'s float is sold short. At the stock's typical daily trading levels, this would take more than a week to buy back. Regardless of the motive, short-term AMD options are relatively affordable right now, as the security's Schaeffer's Volatility Index (SVI) of 44% sits below 81% of comparable readings from the previous year.

  • MRVL, which is scheduled to step into the earnings confessional tonight, lost 0.8% yesterday to land at $13.37. Longer term, the shares are down 7% in 2014, and have underperformed the broader S&P 500 Index (SPX) during the last couple of months. Accordingly, Marvell Technology Group Ltd. has racked up a 10-day ISE/CBOE/PHLX put/call volume ratio of 0.38, which ranks in the 71st percentile of its 12-month range. In other words, speculators have been buying to open puts over calls at an accelerate rate in recent weeks. Meanwhile, MRVL's SVI of 34% stands above just 36% of similar readings from the past year, suggesting short-term contracts are relatively inexpensive at present, even with earnings around the bend.

  • Finally, SIRI dropped 1.1% on Wednesday to close at $3.52, and is only slightly above breakeven on a year-to-date basis. However, in recent weeks, the shares have rallied -- specifically, since touching an October low of $3.14, the stock is up 12.1%. That said, traders at the ISE, CBOE, and PHLX remain unconvinced. Sirius XM Holdings Inc.'s 10-day put/call volume ratio of 0.47 sits above 85% of like readings from the previous 12 months -- though it's possible a portion of these bets were initiated by shareholders bracing against potential downside. In any case, short-term SIRI options can be had at a relative bargain right now, as the equity's SVI of 20% is lower than 91% of other such readings from the past year.

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