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Most Active Weekly Options: Facebook Inc (FB)

Facebook Inc option traders gamble on end-of-week downside

by 10/20/2014 12:37 PM
Stocks quoted in this article:

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 Facebook Inc (NASDAQ:FB), as option traders roll the dice on an end-of-week retreat.

Most Active Weekly Options Table

Facebook Inc is trading 1.1% higher today to linger near $76.78, following reports King Digital Entertainment PLC (NYSE:KING) is planning to launch its new "Candy Crush" game on FB and smartphones in coming weeks. Option traders aren't buying today's positive price action, though, and are scooping up puts at a faster-than-usual clip.

Drilling down, FB's weekly 10/24 75-strike put has garnered the most attention, with 18,265 contracts on the tape at last check. The majority of these puts have traded at the ask price, implied volatility has jumped 9.9 percentage points, and fewer than 3,400 contracts are currently in residence here. Summing it all up, it appears new positions are being purchased.

By initiating the long puts, traders are expecting FB to breach the $75 mark by week's end -- when the weekly series expires. The options market isn't too confident the put will be in the money at Friday's close, as delta on the option is docked at negative 0.30.

Looking ahead, Facebook Inc (NASDAQ:FB) is slated to take its turn in the earnings confessional after the close next Tuesday, Oct. 28. While this scheduled event resides outside of the lifetime of the aforementioned puts, today's bearish bias echoes the withstanding trend witnessed in FB's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 10-day put/call volume ratio of 0.74 ranks higher than all other readings taken in the past year. This, despite the fact that FB has averaged a single-session post-earnings gain of 5.2% over the past four quarters.


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Option Bulls Flock to BlackBerry Ltd (BBRY) Amid M&A Chatter

Short-term traders think BlackBerry Ltd will re-take the $11 level

by 10/20/2014 10:43 AM
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BlackBerry Ltd (NASDAQ:BBRY) has tacked on 3.5% to trade at $9.82, amid rumors of a potential Lenovo buyout. These developments have activity running hot in the stock's options pits -- especially on the call side, where intraday volume more than doubles what's expected at this point in the session.

Short-term contracts are in demand, as conveyed by BBRY's 30-day at-the-money implied volatility, which is 7.7% up at 54.2%. Accordingly, the equity's November 11 call is being traded most heavily, with 5,823 contracts on the tape so far. Volume outstrips open interest, and 79% of the contracts have crossed on the ask side, collectively hinting at newly bought bullish bets.

Long story short, the traders anticipate BlackBerry Ltd (NASDAQ:BBRY) will topple $11 by the close on Friday, Nov. 21, when the newly front-month options expire. Looking back, the shares were north of this level as recently as Sept. 22. From a longer-term perspective, BBRY has tacked on about 32% in 2014, easily outperforming the broader market.


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Option Bears Line Up for Herbalife Ltd. (HLF)

Herbalife Ltd. dropped on Friday, but is pointed higher this morning

by 10/20/2014 9:45 AM
Stocks quoted in this article:

Herbalife Ltd. (NYSE:HLF) is up 1.3% out of the gate -- thanks to a "buy" initiation and a whopping $110 price target at Pivotal Research -- but it was a different story on Friday, when the shares dropped 3.1% to close at $45.43. Not surprisingly, options activity tilted in a bearish direction, with puts trading at a 60% mark-up to the expected intraday rate. While short-term strikes were in demand -- per the stock's 30-day at-the-money implied volatility, which hit an annual high on Friday and ended 5.5% higher at 108.4% -- the most active strike was of the longer-term variety.

Diving right in, the January 2015 35-strike put was HLF's most popular option on Friday, with roughly 5,200 contracts on the tape. Almost all of them crossed at the ask price, and open interest added 4,710 positions over the weekend, collectively suggesting the purchase of fresh bearish bets. This theory is corroborated by data from the International Securities Exchange (ISE) and Trade-Alert.

By buying the puts to open, Friday's speculators expect shares of Herbalife Ltd. (NYSE:HLF) to drop below $35 by January 2015 options expiration. Looking back, however, the stock hasn't breached this level since April 2013. As such, delta on the put is a mere 0.23, suggesting a less than 1-in-4 chance the option will be in the money at expiration.


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Skepticism Grows On Underperforming Transocean LTD (RIG)

Transocean LTD's weekly 10/31 30-strike call is being sold to open today

by 10/17/2014 2:34 PM
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Cowen weighed in on a number of oil-and-gas issues today following Baker Hughes Incorporated's (NYSE:BHI) dismal earnings report, and for Transocean LTD (NYSE:RIG), that meant a downgrade to "market perform" from "outperform" and price-target cut to $30 from $39. Against this backdrop, shares of RIG have plunged 5.9% to $28.37. Meanwhile, in the options pits, overall volume is running at a slightly accelerated clip, and a number of speculators are setting a ceiling for the shares through month's end.

Specifically, the stock's most active call is the weekly 10/31 30 strike, where 2,205 contracts have changed hands -- mostly at the bid price, hinting at seller-driven activity. Plus, volume outstrips open interest, pointing to the initiation of new short positions. By writing the calls to open, traders expect RIG to stay south of $30 through the close on Friday, Oct. 31 -- when the weekly series expires. Amid today's plunge, delta on the call has dropped to 0.34 from 0.54 at last night's close, suggesting a decreased probability the option will expire in the money.

Today's steep sell-off only highlights RIG's withstanding technical troubles, with the shares down more than 42% year-to-date. In spite of this, there are still pockets of optimism found around the Street. In fact, the consensus 12-month price target of $32.19 stands at a 13.5% premium to the equity's current perch. Should Transocean LTD (NYSE:RIG) continue in its downward trajectory, another round of price-target cuts could pressure the shares lower.


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Most Active Options Update: Ford Motor Company (F)

Ford Motor Company sees a rare uptick in pre-earnings call volume

by 10/17/2014 1:28 PM
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 automaker Ford Motor Company (NYSE:F), as one pre-earnings options trader bucks the withstanding bearish trend.

Most Active Options Table

Ford Motor Company has sold off sharply since hitting a three-year high of $18.12 in late July, with the shares off nearly 22% to trade at $14.17. The stock has been making an attempt at technical redemption in recent sessions, and today, F is up 1.4% following an encouraging report on European auto sales. Amid this bounce, calls are trading at 1.4 times the average intraday pace, with one speculator in particular eyeing an extended rebound over the next two weeks -- a time frame that captures F's next quarterly earnings report.

Specifically, F's weekly 10/31 14.50-strike call has seen the most action today, with 18,396 contracts on the tape. The majority of this activity occurred when a massive multi-exchange sweep of 17,310 contracts was bought to open for $0.21 apiece, resulting in an initial cash outlay of $363,510 (number of contracts * premium paid * 100 shares per contract).

This is also the most the trader has to lose, if F remains south of $14.50 through the close on Friday, Oct. 31 -- when the weekly series expires. Gains, meanwhile, are theoretically unlimited, should the stock rally past breakeven at $14.71 (strike plus premium paid) over the next two weeks.

As touched upon, Ford Motor Company (NYSE:F) will take its turn in the earnings confessional ahead of the open next Friday, Oct. 24. Events such as these can often spark accelerated price action in a stock, and today's option bull appears to be hoping for a post-earnings move to the upside. The withstanding trend in F's options pits has tended toward the skeptical side, though. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the equity's 10-day put/call volume ratio of 0.36 ranks in the bearishly skewed 86th percentile of its annual range.


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