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Options Radar: Tesla Motors Inc (TSLA), Kandi Technologies, and Veeva

Reviewing notable options activity on Tesla Motors Inc, Kandi Technologies Group Inc, and Veeva Systems Inc

by 8/29/2014 12:38 PM
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Three names seeing notable options activity today are electric car makers Tesla Motors Inc (NASDAQ:TSLA) and Kandi Technologies Group Inc (NASDAQ:KNDI), and cloud concern Veeva Systems Inc (NYSE:VEEV). Here's a look at how today's options traders have been placing their bets on TSLA, KNDI, and VEEV.

  • TSLA hit the $272.00 mark earlier -- its highest perch on record -- after inking a deal with China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) to build 400 charging stations throughout the mainland. At last check, though, the shares were sitting 2.5% higher at $270.53, bringing their year-to-date lead to a brow-raising 80%. Today's rally has sparked a rush of activity among call players, with volume running at two times what's typically seen at this point in the day. Eleventh-hour traders are buying to open the equity's weekly 8/29 270-strike call, as they gamble on even more upside for TSLA by tonight's close.

  • It's been a volatile week for KNDI, which is off 6% today, after the company priced an offering to institutional investors at $17.20 per share -- a discount to the stock's current perch at $17.98. As such, the equity has been placed on the short-sale restricted list, sending option volume soaring to almost four times the intraday average. Most active is the stock's October 17 call, which is being bought to open for a volume-weighted average price (VWAP) of $2.21. In order for these calls to be profitable at the close on Friday, Oct. 17 -- when the back-month options expire -- KNDI needs to rebound back above breakeven at $19.21 (strike plus VWAP).

  • VEEV call volume has jumped to 22 times the expected intraday amount, as traders react to the stock's 16.4% post-earnings pop to trade at $29.15. Adding to the bullish buzz is a round of price-target hikes from J.P. Morgan Securities, Canaccord Genuity, and Deutsche Bank. Despite today's accelerated option activity, VEEV's 30-day at-the-money implied volatility has plunged 16.9% to 41.3% -- after earlier tagging a 52-week low -- in the wake of last night's scheduled event. The stock's December 30 call has received the most attention, and according to data from the International Securities Exchange (ISE), there is a mix of buy- and sell-to-open activity happening here.

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Most Active Options Update: Advanced Micro Devices, Inc. (AMD)

Option buyers expect a solid September for Advanced Micro Devices, Inc.

by 8/29/2014 12:05 PM
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The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that 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 semiconductor concern Advanced Micro Devices, Inc. (NYSE:AMD), which has seen accelerated call volume.

Most Active Options Table

Advanced Micro Devices, Inc. has added 0.7% to flirt with $4.17, bringing its year-to-date gain to 7.7%. Options traders today are betting on the stock to fill its post-earnings bear gap from mid-July in the next few weeks, buying to open short-term calls.

Overall call volume is running at a 75% mark-up to the intraday average, with roughly 11,000 contracts exchanged. For comparison, fewer than 750 AMD puts have traded. Reflecting the healthy appetite for short-term options, the stock's 30-day at-the-money (ATM) implied volatility (IV) is up 2.5% to 40.9%.

Most active by a mile is the weekly 9/26 4.50-strike call, which has accounted for about half the total call volume thus far. Four-fifths of the calls traded on the ask side, and volume has surpassed open interest at the strike, hinting at newly bought bullish bets.

By purchasing the calls at a volume-weighted average price (VWAP) of $0.07, the buyers will profit if AMD is sitting atop $4.57 (strike plus VWAP) -- the stock's closing price before the aforementioned bear gap -- at the close on Friday, Sept. 26, when the options expire. Profit potential is theoretically unlimited north of breakeven, while risk is capped at the initial premium paid for the calls, should AMD fail to topple the strike by expiration.

It's worth noting, however, that short interest accounts for 22.5% of AMD's total available float. At the stock's average pace of trading, it would take about a week to repurchase all of these bearish bets. Against this backdrop, it's possible that shorts are buying the aforementioned calls to hedge against an extended short-term rebound.

Whatever the motive -- and despite ATM IV edging higher today -- now is an opportune time for buyers to roll the dice with short-term options. Advanced Micro Devices, Inc.'s (NYSE:AMD) Schaeffer's Volatility Index (SVI) of 40% sits in the bottom quartile of its annual range, suggesting the equity's front-month contracts are historically inexpensive right now.


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Amid Continued Rally, GoPro Inc (GPRO) Bulls Pounce

GoPro Inc call buyers are active as the stock continues to cruise higher

by 8/29/2014 10:51 AM
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GoPro Inc (NASDAQ:GPRO) is soaring again this morning, up 3.5% to hover near $50.61 -- just a day after rallying 7.4%. In fact, the stock earlier touched a record high of $51.75. Not surprisingly, calls are trading at a fast and furious pace -- at five times the typical intraday volume -- and short-term contracts are being targeted, based on the 9.0% rise (to 62.7%) in GPRO's 30-day at-the-money implied volatility.

The October 55 call has seen notable buy-to-open activity, and with more than 1,700 contracts on the tape, it's GPRO's second most active strike. These out-of-the-money (OOTM) bets are being scooped up at a volume-weighted average price (VWAP) of $1.79, resulting in an at-expiration breakeven mark of $56.79 (strike plus VWAP). North of this level, gains are theoretically unlimited, while risk is capped at the initial premium paid, should the shares be resting below the strike at the close on Friday, Oct. 17 -- when the back-month options expire.

From a sentiment standpoint, short interest on GoPro Inc (NASDAQ:GPRO) is on the rise. In fact, during the two most recent reporting periods, short interest on the equity jumped 30.8%, and now comprises 5.5% of the stock's float.


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Ford Motor Company (F) Traders Bet On a Quick Breakout

Ford Motor Company has not closed north of $17.50 since July 29

by 8/29/2014 10:49 AM
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Ford Motor Company (NYSE:F) has spent the month of August wallowing beneath the $17.50 mark, and in today's session, the stock is hovering just below here, at $17.44. This isn't stopping a number of option traders from gambling on a quick breakout above this recent area of resistance by next Friday's close.

Taking a step back, calls are trading at a slightly faster-than-usual clip today, and are outpacing puts by a nearly 7-to-1 margin. The majority of the day's action has centered on the weekly 9/5 17.50-strike call, where 9,188 contracts have traded -- mostly at the ask price, hinting at buyer-driven activity. Implied volatility has jumped 3.1 percentage points, and volume outstrips open interest, making it safe to assume new positions are being initiated.

Based on the volume-weighted average price (VWAP) of $0.13, F needs to be sitting at or above $17.63 (strike plus VWAP) at next Friday's close -- when the weekly series expires -- in order for today's call buyers to profit. Risk, meanwhile, is limited to the initial cash outlay, should the security settle south of the strike price at expiration.

Looking ahead, Ford Motor Company (NYSE:F) could be poised to start September on a dismal note. Specifically, the auto issue is scheduled to unveil its August sales numbers ahead of next Wednesday's open, and following the release of its July sales report earlier this month, the stock shed 1.2% in the subsequent session. Elsewhere on the fundamental front, a judge in New York dismissed a 12-year-old apartheid lawsuit against Ford and International Business Machines Corp. (NYSE:IBM), saying the case was out of U.S. jurisdiction.


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Traders Bank On Pfizer Inc. (PFE) Hurdling Resistance

Option bulls expect Pfizer Inc. to overcome resistance at the $29.50 level

by 8/29/2014 10:09 AM
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Pfizer Inc. (NYSE:PFE) calls outstripped puts by a greater than 4-to-1 margin yesterday. Short-term contracts were in vogue, as well, per the stock's 30-day at-the-money implied volatility, which popped 3.7% to 13.3%. In fact, four of the five most active PFE strikes are set to expire within the next month.

Occupying the top spot was the weekly 9/26 29.50-strike call, where roughly 4,000 contracts were exchanged. The majority traded at or near the ask price -- for a volume-weighted average price (VWAP) of $0.41 -- plus open interest soared overnight, collectively pointing to buy-to-open activity at the near-the-money strike.

In sum, the buyers expect PFE to finish above $29.91 (strike plus VWAP) at the close on Friday, Sept. 26, when the weekly series expires. From the stock's perch at $29.44, this would require a 1.6% upside move, with potentially unlimited gains beyond the breakeven mark. Conversely, potential downside is capped at the initial premium paid, should the option expire out of the money.

Looking at the charts, the $29.50 level -- which corresponds with Pfizer Inc.'s (NYSE:PFE) 50-day moving average -- has recently served as a layer of resistance for the shares. As such, despite the strike being just 6 cents from the current stock price, delta on the call is just 0.48 -- signifying a less than 1-in-2 chance of an in-the-money finish.


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