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Traders Expect NXP Semiconductors N.V. (NXPI) to Bounce Back

NXP Semiconductors NV (NXPI) options traded at a breakneck speed yesterday

by 3/27/2015 9:25 AM
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On Thursday, semiconductor stocks -- including NXP Semiconductors NV (NASDAQ:NXPI) -- had another rough day. Shares of the Netherlands-based company dropped 2.6% -- and below the $100 century mark -- to close at $97.50. However, options traders kept the faith.

Looking more closely at NXPI's options pits, volume swelled to almost triple the daily norm yesterday, and calls nearly quadrupled puts. The most active strike was the May 105 call, which saw buy-to-open activity as traders rolled the dice on the stock toppling $105 by the close on Friday, May 15, when back-month options expire.

This optimism is reflected among the brokerage crowd. In fact, 11 of 12 covering analyst have given NXPI a "strong buy" rating, compared to just one "hold" and not a single "sell."

It's no wonder, either. NXP Semiconductors NV (NASDAQ:NXPI) has been a technical marvel, soaring more than 70% over the last 12 months. In fact, the security touched a record peak of $108.50 on Monday. Ahead of the bell, the shares are up 2%.


Put Volume Pops as Juniper Networks, Inc. (JNPR) Drops

Juniper Networks, Inc. (JNPR) puts are trading at five times the average intraday pace

by 3/26/2015 2:59 PM
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Juniper Networks, Inc. (NYSE:JNPR) is down 1.5% this afternoon at $22.36, widening its week-to-date deficit to 5.6%. In the equity's options pits, puts are trading at five times what's typically seen at this point in the day, with a number of speculators eyeing additional downside through tomorrow's close.

Drilling down, the stock's weekly 3/27 22.50-strike put has seen the most action, with 2,497 contracts on the tape at last check -- 73% of the total put volume thus far. It appears as if speculators are buying the puts to open, betting on the stock to extend its decline south of $22.50 through 4 p.m. ET tomorrow, when the weekly series expires.

Today's accelerated put activity is just more of the same for the security. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, JNPR's 10-day put/call volume ratio of 1.96 ranks in the 91st annual percentile. In other words, puts have been bought to open over calls with more rapidity just 9% of the time within the past year.

This skepticism toward a stock that's shed around 12% over the past 52 weeks is witnessed elsewhere on the Street, as well. Of the 25 analysts covering the shares, 18 maintain a tepid "hold" recommendation -- although it appears some are beginning to change their tune -- compared to seven which have levied a "strong buy" rating toward JNPR. Meanwhile, Juniper Networks, Inc.'s (NYSE:JNPR) average 12-month price target of $23.76 stands at a slim 6.3% premium to current trading levels.


Calls Popular as Infinera Corporation (INFN) Rallies

Infinera Corp. (INFN) option traders anticipate new highs

by 3/26/2015 2:25 PM
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Infinera Corp. (NASDAQ:INFN) is bucking the broad-market downtrend, up 5.3% to hit $18.74, after MKM Partners reportedly waxed optimistic on the company's new products and technology vision. This good news is more of the same for the shares of INFN, which have advanced a staggering 109.4% year-over-year. In response to today's uptick, call activity is ramping up in the options pits, with some traders betting that the shares will continue their uptrend.

Drilling down, calls have traded at 16 times the average intraday rate, and are outpacing puts by an over 58-to-1 margin. Today's most active contract is the May 18 call, where it appears a decent portion of the action is of the buy-to-open category. The volume-weighted average price (VWAP) of the call is $1.58, meaning the buyers will profit if INFN topples $19.58 (strike plus VWAP) -- in seven-year-high territory -- by the close on Friday, May 15, when the contracts expire.

This spate of call buying runs parallel to recent sentiment in the options pits, as INFN's Schaeffer's put/call open interest ratio (SOIR) of 0.11 ranks in the 3rd percentile of its annual range. Simply stated, short-term speculators have rarely been this call-heavy over the past year. However, approximately 10.7% of the stock's available float is sold short, which would take over two weeks to cover, at average trading volumes. As such, it's possible that some of the calls on the long side -- especially at out-of-the-money strikes -- may have been initiated as hedges by shorts.

Meanwhile, the brokerage bunch is mostly bullish on Infinera Corp. (NASDAQ:INFN), as 78% of covering analysts rate the stock a "strong buy," with no "sell" or worse recommendations to be found. There's still room on the bullish bandwagon, though; the security's average 12-month price target of $18.94 is within striking distance of the shares' current perch.

Daily Chart of INFN Since March 2014


Call Buyers Take Aim at Surging Novo Nordisk A/S (NVO)

Novo Nordisk A/S (ADR) (NVO) is seeing tons of action at the 55 strike

by 3/26/2015 2:14 PM
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Novo Nordisk A/S (ADR) (NYSE:NVO) is ripping it up today -- tacking on 6.5% to trade at $53.06, and fresh off a record high of $53.75. Powering shares of the pharmaceutical firm is an announcement that its novoeight hemophilia A treatment will be launched in the U.S. by mid-April. Not surprisingly, options traders are gravitating toward calls over puts, while the stock's 30-day at-the-money implied volatility hit a 52-week peak of 36.7% earlier.

Diving right in, speculators are paying close attention to the 55 strike. Specifically, it looks like there may be buy-to-open activity transpiring at NVO's April and May 55 calls. The call buyers anticipate the shares will topple the $55 mark by the respective expiration dates, territory yet to be charted by NVO.

History shows long calls have been preferred over puts recently. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NVO has racked up a call/put volume ratio of 10.22 -- just 1 percentage point shy of a 12-month high.

This isn't entirely unexpected, given the technical tenacity of Novo Nordisk A/S (NYSE:NVO). Year-to-date, the shares have advanced 25%. Even more impressively, since hitting a recent low of $41.87 in early February, NVO has shot 26.7% higher.

Daily Chart of NVO since February 2015


Diplomat Pharmacy, Inc. (DPLO) Reversal Has Options Traders Circling

Diplomat Pharmacy Inc (DPLO) hit an all-time peak earlier

by 3/26/2015 1:44 PM
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Diplomat Pharmacy Inc (NYSE:DPLO) was down in electronic trading, after the firm priced its follow-on stock offering at $29 per share -- a discount to last night's close. However, the equity quickly reversed course, and was last seen up 14% at $34.54, hitting a record high of $34.90 along the way. This volatile price action has sparked a rush of activity in the equity's options pits, with contracts crossing the tape at 11 times the average intraday rate.

Calls have emerged as the options of choice, and are outpacing puts by a roughly 2-to-1 margin. Traders have set their sights on another all-time peak -- with buy-to-open activity possibly occurring at DPLO's April and August 35 calls. For those purchasing new positions, the goal is for the security to rally above the strike by the respective expiration dates.

From a wider perspective, sentiment is generally optimistic toward a stock that's more than doubled since going public on Oct. 10. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, speculators have bought to open 2.21 calls for every put over the past two weeks.

Elsewhere, four of six covering analysts maintain a "strong buy" rating on the equity, versus two "holds." However, Diplomat Pharmacy Inc's (NYSE:DPLO) average 12-month price target of $33.67 sits below current trading levels, meaning there's room for a round of price-target hikes, should the shares maintain their upward trajectory.


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