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Short-Term Traders Raid Mondelez International Inc (MDLZ)

Mondelez International Inc call buyers are again out in force today

by 11/19/2014 2:38 PM
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Mondelez International Inc (NASDAQ:MDLZ) is up 1.2% this afternoon at $39.15, bringing its year-to-date advance close to 11%. Meanwhile, options activity is sizzling, with calls trading at more than five times the usual intraday clip. What's more, the stock's 30-day at-the-money implied volatility has jumped 23.8% to 19.9%, signaling elevated demand for short-term contracts.

Diving right in, the most active MDLZ strike is the near-the-money December 40 call, where, more than 11,800 contracts have changed hands. Roughly 70% have done so at the ask price, and volume outweighs open interest, pointing to buy-to-open activity. Data from the International Securities Exchange (ISE) and Trade-Alert confirms this theory.

In other words, the buyers expect MDLZ to topple $40 by the close on Friday, Dec. 19, when the soon-to-be front-month options expire. This would put the shares in all-time-high territory.

Today's preference for long Mondelez International Inc (NASDAQ:MDLZ) calls over puts is business as usual, according to information from the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Over the past 10 days, the stock has racked up a call/put volume ratio of 4.27 across these three exchanges -- outstripping more than three-quarters of comparable readings from the last year.


Most Active Options Update: Alibaba Group Holding Ltd (BABA)

Alibaba Group Holding Ltd option bulls won't give up

by 11/19/2014 2:21 PM
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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 China-based e-commerce firm and arguable market darling Alibaba Group Holding Ltd (NYSE:BABA), which continues to attract short-term option bulls.

Most Active Options Table

Alibaba Group Holding Ltd is 0.6% lower at $110.15, bringing its week-to-date loss to 4.3%. Nevertheless, intraday call volume is running at twice the average pace, with roughly 220,000 contracts traded -- more than double the number of BABA puts exchanged.

The equity's 30-day at-the-money implied volatility (IV) has edged 3.9% higher, hinting at elevated demand for short-term contracts. Lo and behold, the most active option thus far is the at-the-money November 110 call, with close to 19,000 contracts traded.

A healthy portion of the calls crossed on the ask side, IV is rising, and volume exceeds current open interest, pointing to newly bought bullish bets. This theory is at least partially confirmed by data from the International Securities Exchange (ISE).

By buying the calls at a volume-weighted average price (VWAP) of $1.21, the buyers will profit if BABA climbs back atop $111.21 (strike plus VWAP) by Friday's close, when front-month options expire. Profit potential is theoretically unlimited north of breakeven, while risk is capped at the initial premium paid for the contracts.

As Alibaba Group Holding Ltd (NYSE:BABA) ticks lower, delta on the call has dropped to 0.51 from 0.58 at yesterday's close, pointing to reduced odds of an in-the-money expiration. Although BABA has added roughly 19% since its public debut on Sept. 19, the stock has shed 8.2% since peaking at $120 last Thursday, and is on pace to finish a second straight session beneath its 10-day moving average.


Most Active Weekly Options: Microsoft Corporation (MSFT)

Microsoft Corporation option traders continue to switch sides

by 11/19/2014 1:58 PM
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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 Microsoft Corporation (NASDAQ:MSFT), where sentiment continues to shift to the bullish side.

Most Active Weekly Options Table

Microsoft Corporation option traders have been initiating long puts over calls at an accelerated clip in recent months, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 50-day put/call volume ratio of 0.79 across this trio of exchanges sits higher than 89% of similar readings taken in the past year.

Recently, though, option traders have begun to switch sides -- a trend that's evident today, with calls crossing the tape at 1.3 times the average intraday pace. Receiving notable attention is MSFT's weekly 12/5 48-strike call, as it appears a number of speculators are betting on the stock to resume its long-term uptrend over the next several weeks.

Specifically, 2,135 contracts have changed hands here -- 96% at the ask price, signaling buyer-driven volume. Implied volatility has edged higher, and fewer than 550 contracts are in residence, making it safe to assume a fresh batch of bullish bets is being initiated. With the stock currently perched just north of the strike -- at $48.16 -- delta on the call is docked at 0.54, suggesting a greater than 1-in-2 chance the option will be in the money at the close on Friday, Dec. 5 -- when the weekly series expires.

As touched upon, MSFT has been a long-term outperformer, with the shares boasting an impressive 29% year-to-date gain. Meanwhile, although the equity is 1.2% lower today amid a broad-market downturn, it's finding a foothold near $48, which is site to a heavy accumulation of put open interest in the soon-to-expire November series of options. This area could continue to serve as support through Friday's close, as the hedges related to these bets unwind ahead of expiration.

On the fundamental front, Microsoft Corporation (NASDAQ:MSFT) scored a legal victory today when a judge denied Samsung's request to delay a patent royalty lawsuit. Drilling down, MSFT alleges Samsung owes it roughly $7 million in interest on a late patent royalty payment of $1 billion, while Samsung claims the deal was nullified with MSFT's purchase of Nokia Corporation's (ADR) (NYSE:NOK) handset business.


Options Radar: Garmin Ltd., Mosaic Co, and Barrick Gold Corporation

Reviewing notable options activity on Garmin Ltd., Mosaic Co, and Barrick Gold Corporation (USA)

by 11/19/2014 12:33 PM
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Option traders have taken a shine to GPS maker Garmin Ltd. (NASDAQ:GRMN), fertilizer firm Mosaic Co (NYSE:MOS), and commodities concern Barrick Gold Corporation (USA) (NYSE:ABX). Here's a look at how speculators have been placing their bets on GRMN, MOS, and ABX.

  • Garmin Ltd. (NASDAQ:GRMN) is 2.6% higher at $58.11, amid swirling takeover rumors. Against this backdrop, GRMN calls are trading at 16 times the average intraday pace, and have outnumbered puts by a margin of more than 20-to-1. Furthermore, the equity's 30-day at-the-money (ATM) implied volatility (IV) has popped 12.2% to 25.6%, reflecting the surging demand for short-term contracts. In fact, the soon-to-expire November 57.50 call is most active, with more than 2,600 contracts exchanged. It appears traders are buying the calls to open, hoping GRMN extends today's journey north of $57.50 through the end of the week, when front-month options expire.

  • Mosaic Co (NYSE:MOS) is once again enjoying a sector-wide rally, as potash producers climb on a Russian rival's production halt. Like peer Potash Corp./Saskatchewan (USA) (NYSE:POT), MOS has felt the analyst love today. Susquehanna upped its opinion to "positive" from "neutral" and lifted its price target to $58 from $50, while Canaccord Genuity hiked its price target to $48 from $45 (but maintained a "hold" rating). For the second straight session, MOS calls are flying off the shelves, trading at 10 times the average intraday rate. The security's 30-day ATM IV is up 11.1% at 22.6%, with buy-to-open activity detected at the November 47.50 and January 2015 50-strike calls. At last check, MOS has added 2.4% to flirt with $47.88, bringing its week-to-date gain to 6%.

  • Finally, Barrick Gold Corporation (USA) (NYSE:ABX) is down 4.2% at $12.74, after the firm said it's replacing Chief Financial Officer Ammar Al-Joundi -- the company's second major executive departure in as many months. In the options pits, ABX puts are trading at twice the typical intraday rate, and the stock's 30-day ATM IV has edged 5.4% higher to 45.8%. Upon closer inspection, it looks like traders are buying to open the November 12.50 put, expecting ABX to breach the strike by the end of the week, when the options expire.


JetBlue Airways Corporation (JBLU) Bull Sees Higher Highs Ahead

One JetBlue Airways Corporation trader rolled her long call position up and out

by 11/19/2014 12:32 PM
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JetBlue Airways Corporation (NASDAQ:JBLU) is up 4.4% at $13.27 -- and earlier hit a seven-year high of $13.48 -- as traders cheer the company's plans to appease shareholders at the expense of its passengers. Specifically, JBLU said it is adding more seats to its Airbus 320, and will begin charging baggage fees. Against this backdrop, calls are crossing the tape at a rate seven times the intraday average, and are outpacing puts by a roughly 27-to-1 margin.

The majority of the day's action has centered on two options -- the January 2015 13-strike call and the March 14 call, where a collective 21,603 contracts have traded. According to Trade-Alert, the bulk of the activity occurred as several large blocks of the former were sold to close, while symmetrical blocks of the latter were simultaneously bought to open.

In other words, it appears this speculator rolled her bullish bet up and out, eyeing additional gains for JBLU through March options expiration. Delta on the March 14 call is docked at 0.47, suggesting a 47% chance JBLU will be sitting north of $14 at the close on Friday, March 20 -- a feat not accomplished since February 2007.

Today's call-skewed session just echoes the shift in sentiment JBLU has been experiencing in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 43.29 ranks in the 84th percentile of its annual range. Although, with more than one-fifth of JetBlue Airways Corporation's (NASDAQ:JBLU) float sold short, a portion of this activity could be at the hands of short sellers initiating upside hedges.


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