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Legal Drama Lures Ericsson (ADR) (ERIC) Bulls

One Ericsson (ADR) (ERIC) trader is rolling the dice on a move north of $14

by 2/27/2015 1:41 PM
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Swedish tech issue Ericsson (ADR) (NASDAQ:ERIC) has seen major call volume today, after the firm ramped up its patent infringement dispute with Apple Inc. (NASDAQ:AAPL) -- just two days after the iPhone maker suffered a legal defeat. Against this backdrop, it looks like some option players are gambling on new highs for ERIC within the next few months.

Intraday call volume is running at 19 times the norm, with nearly all of the action attributable to a sweep of roughly 3,500 contracts at the October 14 strike. The buyer bought the contracts to open at a volume-weighted average price (VWAP) of $0.49, placing at-expiration breakeven at $14.49 (strike plus VWAP) -- territory not charted since July 2011. Should the equity remain south of $14 through October options expiration, the most the trader will lose is the initial premium paid for the calls.

Today's appetite for Ericsson (NASDAQ:ERIC) calls is just more of the same for the stock, which was last seen 0.5% higher at $12.95. 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 84.17 stands 13 percentage points from an annual high, pointing to accelerated call buying of late.

Weekly Chart of ERIC since May 2011

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Put Trader Dominates Mobileye NV (MBLY) Options Pits

One Mobileye NV (MBLY) trader initiated a ratio spread

by 2/27/2015 1:40 PM
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Just a day after posting an earnings beat, Mobileye NV (NYSE:MBLY) is following the broader market lower -- down 0.7% this afternoon to trade at $35.56. As such, put volume has ramped up, with the contracts crossing at more than double the usual pace for this point in the session.

Digging deeper, roughly 70% of the MBLY puts on the tape were exchanged as part of what looks to be a two-legged ratio spread. Specifically, it appears one speculator bought to open 5,000 in-the-money March 43 puts, while selling to open 2,000 near-the-money March 35 puts -- helping to offset the cost of the larger block. From the looks of it, this trader is rolling the dice on additional downside through March options expiration -- though this theory may be complicated by Trade-Alert indications that both lots were tied to stock.

On the sentiment front, MBLY received a $2 price-target hike to $43 from Baird, which nonetheless underscored a tepid "neutral" rating. The former comes as a mild surprise, considering the stock has dropped more than 12% year-to-date.

Less surprising is the high level of short interest on Mobileye NV (NYSE:MBLY). Specifically, 14.5% of the stock's float is sold short, and it would take more than six sessions to buy back all these positions, given MBLY's average daily trading volume.


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Nokia Corporation (NOK) Traders See a Short-Term Surge

Nokia Corporation's (ADR) (NOK) weekly 3/6 8-strike call is in focus today

by 2/27/2015 12:57 PM
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Put players have been active in Nokia Corporation's (ADR) (NYSE:NOK) options pits of late, as evidenced by data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, the stock's 10-day put/call volume ratio of 0.37 across these exchanges rests in the 73rd annual percentile, meaning puts have been bought to open over calls at a quicker-than-usual clip.

Today, however, calls are crossing the tape at six times the average intraday pace. What's more, roughly 12,000 calls have changed hands, compared to just 21 puts. Most active by a mile is NOK's weekly 3/6 8-strike call, where it appears new positions are being purchased. By initiating the long calls, speculators expect NOK to rally north of $8 through next Friday's close, when the weekly series expires.

Regardless of whether options traders are buying puts or calls, short-term speculators are currently able to place their bets at a relative bargain. In fact, NOK's Schaeffer's Volatility Index (SVI) of 25% ranks lower than 99% of similar readings taken in the past year, meaning premium on the equity's near-term options is pricing in extremely low volatility expectations at the moment.

Technically speaking, Nokia Corporation (NYSE:NOK) has put in a fairly uninspiring performance in recent months, and has spent the past nine months churning in a tight range between $7.50 and $8.50. In today's trading, the stock is struggling for direction along with the broader equities market, but was last seen up 0.4% at $8.04.


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Call Buyers Active as GoPro, Inc. (GPRO) Collapses

GoPro Inc (GPRO) is on pace for its second big loss in the last two weeks

by 2/27/2015 11:20 AM
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GoPro Inc's (NASDAQ:GPRO) fall from grace is continuing this morning, with the shares down 5.4% at $42.21 -- their largest intraday deficit since Feb. 18. Since reaching a record $98.47 in early October, the stock has plummeted 57% to flirt with six-month lows. Today, however, at least one group of options traders appears to be keeping the faith, despite concerns about competition out of China.

Taking a quick step back, GPRO calls are crossing at a 74% mark-up to the typical intraday rate. Meanwhile, buy-to-open activity may be transpiring at the weekly 3/6 45-strike call, as speculators roll the dice on a rebound by next Friday's close -- when the series expires. The largest trade at the strike consisted of 1,000 contracts, and Trade-Alert indicates it was tied to stock.

Elsewhere on the Street, skepticism is mounting on GoPro Inc (NASDAQ:GPRO). Short interest shot nearly 35% higher during the last two reporting periods, and more than 35% of the equity's float is currently sold short. What's more, eight out of the 13 analysts tracking the shares have doled out a "hold" or worse opinion.


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Monster Beverage Corporation (MNST) Earnings, M&A Hopes Bring Bulls

Monster Beverage Corp (MNST) option traders anticipate higher highs

by 2/27/2015 10:58 AM
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Monster Beverage Corp (NASDAQ:MNST) earlier hit an all-time high of $143.90, and was last seen 12.6% higher at $140.50, as traders gawk over its fourth-quarter earnings numbers. In addition, analysts at Stifel said the stellar report "increases the likelihood of an outright acquisition" by The Coca-Cola Co (NYSE:KO). In the stock's options pits, speculators are betting on even more upside for MNST, with calls trading at 38 times what's normally seen at this point in the day, and more than doubling put volume.

Rolling up our sleeves, MNST's most popular contract today is the weekly 2/27 145-strike call, where buy-to-open activity has taken place. This contract has seen more than double the amount of contracts as the next closest option. These late-hour bulls are expecting the shares to continue their rally above $145 by today's close, when the contracts expire. Such a move would bring MNST's single-day gain to over 16%, and would make it by far the stock's biggest daily post-earnings move in at least two years.

The 145 strike isn't the only weekly contract seeing action today. Less aggressive traders are buying to open the in-the-money weekly 2/27 140-strike call, hoping for MNST to extend its run above $140.

It's not an oddity to see calls outnumbering puts in MNST's options pits. According to the stock's Schaeffer's put /call open interest ratio (SOIR) of 0.47, short-term speculators have only been more call-skewed 10% of the time in the past year.

On the Street, however, analysts are split. While six brokerage firms rate the stock a "buy" or better, seven others maintain tepid "hold" recommendations. However, along with Stifel -- which hiked its price target to $165 from $130 -- MNST received bullish analyst attention from Jefferies, J.P. Morgan Securities, and BMO. Moreover, the shares have easily surpassed their average 12-month price target of $123.53, setting the stage for more price-target hikes.

On the technical front, Monster Beverage Corp (NASDAQ:MNST) has been spectacular. Today's gains bring the stock's 52-week lead to nearly 90%.


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