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Options Radar: Barrick Gold, JDS Uniphase, and U.S. Steel

Reviewing notable options activity on Barrick Gold Corporation (USA), JDS Uniphase Corp, and United States Steel Corporation

by 10/29/2014 2:41 PM
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Three stocks seeing notable options activity today are commodity concern Barrick Gold Corporation (USA) (NYSE:ABX), communications expert JDS Uniphase Corp (NASDAQ:JDSU), and metal magnate United States Steel Corporation (NYSE:X). Here's a look at how today's options traders have been placing their bets on these three names.

  • Ahead of tonight's third-quarter earnings report, Barrick Gold Corporation (USA) (NYSE:ABX) is off 4.2% at $12.95, after earlier touching a 14-year low of $12.90. Not surprisingly, puts are flying off the shelves at more than double the expected intraday rate. It appears short-term ABX options are in demand, too, based on the stock's 30-day at-the-money (ATM) implied volatility (IV), which has gained 1.6% to 34.5%. Digging deeper, the equity's November 12 put is seeing buy-to-open activity, as option bears wager on lower lows over the next several weeks.

  • JDS Uniphase Corp (NASDAQ:JDSU) will also report quarterly numbers later this afternoon. In the lead-up to that event, the shares are off 1.1% at $12.33, bringing their year-to-date deficit to 5%. Meanwhile, puts are trading at a breakneck pace -- 11,000 contracts are currently on the tape, versus an expected amount of roughly 500 -- and the security's 30-day ATM IV has popped 7.5% to 46.7%, suggesting short-term strikes are sought-after. Digging deeper, near-term option bears are buying to open JDSU's November 11 put, anticipating additional downside. Meanwhile, longer-term skeptics may be selling to open the stock's January 2015 13-strike call, rolling the dice on a technical ceiling over the next several months.

  • United States Steel Corporation (NYSE:X) has soared 5.8% to trade at $40.37, after besting the Street's earnings and sales estimates for the third quarter. In so doing, the equity is shrugging off a price-target cut to $42 from $48 at Jefferies, which also reiterated its "hold" opinion on the shares. In the options pits, volume is double what's expected at this point in the day. Most active is X's January 2015 40-strike put, which bearish bettors are buying to open in the hopes of a retreat below the round-number $40 level. Another strike seeing significant activity is the November 45 call, where traders are writing to open positions in the expectation of a short-term ceiling. However, should X continue to run higher -- the shares are up 37% year-to-date -- an unwinding of this pessimism could result in tailwinds.


Most Active Options Update: Twitter Inc (TWTR)

Twitter Inc option bulls keep the faith

by 10/29/2014 2:12 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 microblogging concern Twitter Inc (NYSE:TWTR), as option traders keep the faith on the struggling stock.

Most Active Options Table

It's been a rough couple of days for Twitter Inc, which shed almost 10% yesterday following a poorly received earnings report and subsequent round of bearish brokerage notes. Today, the shares are down 3.6% to churn near $42.19, as a newly inked partnership with International Business Machines Corp. (NYSE:IBM) fails to spark excitement on the Street.

Not everyone is throwing in the proverbial towel on the stock, though. In the options pits, calls are trading at 1.2 times what's typically seen at this point in the day, and per the equity's 30-day at-the-money implied volatility (IV) -- which is up 2% to 44.9% -- short-term contracts are in demand.

Most active is TWTR's November 43 call, where 11,729 contracts have changed hands. The majority of these have traded at the ask price, IV is up 2.3 percentage points, and volume outstrips open interest, making it safe to assume new positions are being purchased. At last check, delta on the call was docked at 0.47, suggesting a roughly 1-in-2 chance the option will be in the money at the close on Friday, Nov. 21, when front-month options expire.

Should Twitter Inc (NYSE:TWTR) fail to reclaim its perch atop $43 by expiration, the most the speculators stand to lose is the initial premium paid. Good news for today's call buyers -- in the wake of Monday night's earnings report, TWTR's Schaeffer's Volatility Index (SVI) fell to 44% from 76%, and is now ranked lower than 87% of similar readings taken in the past year. Simply stated, premium on the stock's front-month options is relatively inexpensive at the moment.


Most Active Weekly Options: International Business Machines (IBM)

International Business Machines Corp. just announced a partnership with Twitter Inc

by 10/29/2014 12:25 PM
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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 International Business Machines Corp. (NYSE:IBM), where calls are flying off the shelves amid news of a partnership with Twitter Inc (NYSE:TWTR).

Most Active Weekly Options Table

As alluded to, International Business Machines Corp. announced it will be collaborating with TWTR on a number of enterprise solutions that will leverage the former's analytics solutions and the latter's social media data. Amid this news, IBM calls are being exchanged at more than twice the usual intraday rate, and outweigh puts 23,000 contracts to 10,000. What's more, the stock's 30-day at-the-money implied volatility (IV) has edged 1.1% higher to 16.5%, signaling elevated demand for short-term strikes.

The two most active options by a mile are the weekly 10/31 165- and 167.50-strike calls, where a collective 8,549 contracts are on the tape. The majority have crossed at or near the ask price, IV is up, and volume outstrips open interest, making it safe to assume fresh bullish bets are being initiated. In short, these buyers expect IBM to topple the respective strike prices by this Friday's close, when the weekly calls expire.

While today's options pits are decidedly bullish, very little has happened on the charts so far. In fact, at last check, International Business Machines Corp. (NYSE:IBM) is up just 0.2% at $163.88, as the shares struggle to recover from last week's post-earnings swoon.


Weekly Call Buyers Flock to El Pollo Loco Holdings Inc (LOCO)

El Pollo Loco Holdings Inc's three most active strikes yesterday will expire Friday night

by 10/29/2014 10:31 AM
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El Pollo Loco Holdings Inc (NASDAQ:LOCO) popped 6.4% yesterday, and short-term options traders took notice. This was especially true on the call side of the fence, where contracts changed hands at a 27% mark-up to the single-day norm. What's more, the stock's 30-day at-the-money implied volatility edged 2.5% higher to 68.6%, underscoring the strong demand for short-term strikes.

Diving into the details, LOCO's three most active options yesterday all expire this Friday night. Specifically, the weekly 10/31 35.50-, 36-, and 37-strike calls saw a total of 1,373 contracts cross the tape -- the majority at the ask price, suggesting they were purchased. Open interest rose overnight at each strike, as well, making it safe to assume fresh bullish bets were initiated -- a theory echoed by Trade-Alert.

By buying the weekly calls to open, the traders anticipate LOCO will finish atop the respective strike prices at week's end, when the series expires. Delta for the 35.50-strike call is 0.59, signifying a 59% chance the option will be in the money at week's end. Meanwhile, delta for the 36- and 37-strike calls is 0.43 and 0.26, respectively.

Looking ahead, El Pollo Loco Holdings Inc (NASDAQ:LOCO) will report third-quarter earnings after the close next Thursday, Nov. 6 -- its second such event since going public in late July. Analysts, on average, are expecting per-share earnings of 12 cents from the restaurant chain. At last check, shares of LOCO -- after rallying out of the gate -- are down 1.5% at $35.86.


Options Check-Up: Groupon Inc, First Solar, Inc., and Yahoo! Inc.

Analyzing recent option activity for GRPN, FSLR, and YHOO

by 10/29/2014 7:43 AM
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Among the stocks attracting attention from options traders lately are mass-discount provider Groupon Inc (NASDAQ:GRPN), alternative energy concern First Solar, Inc. (NASDAQ:FSLR), and Internet issue Yahoo! Inc. (NASDAQ:YHOO). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on GRPN, FSLR, and YHOO.

  • GRPN added 1.2% to land at $6.00 on Tuesday, but remains 49% lower year-to-date. In fact, the shares have surrendered more than 10% in October, led lower beneath their 10-day and 20-day moving averages. However, ahead of Groupon Inc's turn in the earnings confessional Thursday night, option buyers have picked up calls over puts at an accelerated clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 6.19 stands higher than 77% of all other readings from the past year. However, considering short interest accounts for 22% of GRPN's total available float, it's possible that some of the recent call buying could be attributable to short sellers looking for a short-term options hedge. Whatever the motive, now isn't the best time to pick up GRPN's short-term contracts; the stock's Schaeffer's Volatility Scorecard (SVS) sits at a relatively low 34, suggesting the equity's options have tended to be overpriced during the last year, relative to GRPN's technical movement.

  • FSLR soared 5.7% to $57.38 on Tuesday, bringing its year-to-date gain to 5%. What's more, the shares ended north of their 20-day moving average for the first time since mid-September. First Solar, Inc. is scheduled to report third-quarter earnings after the close next Thursday, Nov. 6, and option buyers are gambling on a dip. The equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.91 sits just 3 percentage points from an annual peak, pointing to a healthier-than-usual appetite for FSLR puts over calls of late. The security's SVS of 77 indicates that FSLR has tended to make outsized moves on the charts during the past 52 weeks, relative to what the options market has priced in.

  • Finally, YHOO jumped 2.6% to finish at $45.85, and followed Alibaba Group Holding Ltd (NYSE:BABA) into new-high territory, peaking at a decade-plus high of $46.15. The shares of Yahoo! Inc. have tacked on 12.5% in October, yet put buying has accelerated on the major exchanges. Specifically, YHOO sports a 10-day ISE/CBOE/PHLX put/call volume ratio of 0.48 -- in the 94th percentile of its annual range. Of course, considering YHOO's ascent -- the stock's 14-day Relative Strength Index (RSI) of 72 sits in overbought territory, suggesting a short-term breather could be in the cards -- some of those puts may have been bought by shareholders looking for options insurance. In any event, now is an opportune time to gamble with YHOO's short-term contracts. The equity's Schaeffer's Volatility Index (SVI) of 34% stands higher than just 29% of all other readings from the past year, suggesting near-term options are attractively priced right now, from a historical standpoint.


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