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Option Bulls Zero In on Xilinx, Inc. (XLNX)

Xilinx, Inc. (XLNX) traders are buying soon-to-expire calls

by 4/16/2015 2:19 PM
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Tech name Xilinx, Inc. (NASDAQ:XLNX) is 1.2% higher at $44.40, and is on pace for its highest settlement of 2015. Looking to the options pits, call volume is running at twice the average intraday pace, with some traders gambling on last-minute upside for the stock.

Today's most popular contract by a mile is the April 45 call, where it appears new positions are being bought to open. By purchasing this option at a volume-weighted average price (VWAP) of $0.26, speculators expect XLNX to muscle its way north of $45.26 (strike plus VWAP) by the close tomorrow, when the contract expires.

Today's appetite for calls echoes recent sentiment in the options pits, with speculators upping the bullish ante ahead of earnings next Wednesday. Over the past 10 days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 24.18 XLNX calls have been bought to open for every put, which is a higher ratio than 97% of all equivalent readings taken over the past year.

Meanwhile, the brokerage bunch is lukewarm at best on Xilinx, Inc. (NASDAQ:XLNX). Specifically, 72% of covering analysts rate the security a "hold" or worse. Additionally, XLNX's consensus 12-month price target of $42.76 sits below current trading levels, suggesting a round of upbeat analyst attention could be coming around the bend, should XLNX extend its momentum.

Daily Chart of XLNX Since October 2014

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AOL Inc. (AOL) Call Buyers Place Optimistic Bets

AOL, Inc.'s (AOL) May 42 call is seeing buy-to-open action

by 4/16/2015 1:47 PM
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AOL, Inc. (NYSE:AOL) is off 0.5% this afternoon at $39.62, but options traders remain optimistic -- as they have been on a number of Internet names. At last check, calls were flying off the shelves at 18 times the usual intraday pace, and the stock's 30-day at-the-money implied volatility has soared 14.2% to 48.5%, indicating elevated demand for short-term strikes.

Seeing the most action by far is the May 42 call, where more than 4,500 contracts have changed hands. All signs point to buy-to-open activity, meaning speculators anticipate AOL will take out $42 by the close on Friday, May 15, when the soon-to-be front-month options cease trading.

Along similar lines, the stock's Schaeffer's put/call open interest ratio (SOIR) sits at an annual low of 0.23. In other words, call open interest outweighs put open interest by a historic margin, among options expiring in the next three months.

However, not everyone's so confident in AOL. Over half of the analysts tracking the shares consider them a "hold" or worse. Also, 5.5% of the equity's float is sold short, representing almost five times its typical daily trading levels.

Technically speaking, AOL, Inc. (NYSE:AOL) is on pace for a second straight finish above its 20-day moving average -- the first time that's happened since mid-March. What's more, it appears the 10- and 20-day trendlines are on the verge of a bullish cross, which is promising in the short term. If AOL can capitalize on this technical set-up, a round of upgrades and/or short-covering activity could provide a tailwind.


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Call Buying Stays Hot on Facebook, Inc. (FB) and Twitter, Inc. (TWTR)

Facebook Inc (FB) and Twitter Inc (TWTR) continue to outperform

by 4/16/2015 11:23 AM
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Call buyers have been running rampant in Facebook Inc's (NASDAQ:FB) options pits for a while now. During the past 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock has amassed a call/put volume ratio of 2.67, which outranks 95% of all other readings from the past year.

The bullish trend is continuing today, where call volume is more than doubling put volume. Looking at the data, traders appear to be buying to open the April 84 and 84.50 calls, betting on FB to eclipse the strikes by the close tomorrow, when front-month options expire.

On the charts, FB has been solid, adding 5.5% in 2015 to trade at $82.34. In fact, the shares hit an all-time high of $86.07 late last month.

As impressive as FB has been, it's been outdone in 2015 by sector peer Twitter Inc (NYSE:TWTR), which has tacked on a whopping 43.3% since the start of the year. At last check, the shares were 0.2% higher at $51.40.

Daily chart of TWTR since January 2015

TWTR's options pits have seen activity similar to those of FB. The security's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.85 is only 1 percentage point from an annual high. And as with FB, TWTR call buyers are active today, with speculators targeting the April 52 call. Data is giving the impression of buy-to-open activity here, meaning purchasers are betting on TWTR topping $52 by tomorrow's close.

On the Street, both Twitter Inc (NYSE:TWTR) and Facebook Inc (NASDAQ:FB) saw their price targets hiked at Pivotal Research this morning. The brokerage firm raised its price target to $54 from $51 on TWTR, and to $107 from $106 on FB -- territory never before explored by the latter. TWTR could be in-line for additional bullish attention, too. Despite the stock's technical strength, 12 of 26 brokerage firms maintain a "hold" or worse rating on the shares.


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DryShips Inc. (DRYS) Option Bulls Climb On for the Long Haul

The Nasdaq sent DryShips Inc. (DRYS) a delisting warning

by 4/16/2015 10:49 AM
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DryShips Inc. (NASDAQ:DRYS) is following in the bearish footsteps of the broader equities market today, down 2.8% to trade at $0.77. In the equity's options pits, meanwhile, call volume has soared to 10 times what's typically seen at this point in the day, and it appears nearly all of this morning's speculators are betting on DRYS to bounce higher over the next nine months.

Specifically, the security's January 2016 0.50-strike call is in high demand, with 3,501 contracts on the tape at last check -- roughly 95% of the day's total intraday volume. It looks as though new positions are being purchased for a volume-weighted average price (VWAP) of $0.40, making at-expiration breakeven for the speculators $0.90 (strike plus VWAP). Should the shares be sitting south of $0.50 at January options expiration, though, the most today's call buyers stand to lose is the premium paid.

Widening the sentiment scope reveals traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown a preference for long calls over puts in recent weeks. Specifically, the stock sports a top-heavy 20-day call/put volume ratio of 16.40 across this trio of exchanges.

Technically speaking, it's been a rough road for DryShips Inc. (NASDAQ:DRYS). Over the past 52 weeks, the shares have surrendered more than three-quarters of their value. In fact, the shares have not closed north of $1 since Feb. 25, prompting the Nasdaq to warn the company of a possible delisting.

Daily Chart of DRYS Since April 2014

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Skeptics Pounce as BlackBerry Limited (BBRY) Flirts with $10

BlackBerry Ltd (BBRY) is nearing double-digit territory

by 4/16/2015 10:48 AM
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BlackBerry Ltd (NASDAQ:BBRY) is flirting with double-digit territory today, topping out at $10.04 and last seen 0.2% higher at $9.99. However, that isn't stopping one group of option bettors from wagering on future downside for the handset maker.

Currently, BBRY puts are crossing at more than double the usual intraday rate, and outstripping calls by a solid margin. Seeing the most activity by far is the in-the-money May 11 put, which is seeing buy-to-open activity according to the International Securities Exchange (ISE). Based on the volume-weighted average price (VWAP) of $1.18, the buyers are expecting the stock to tumble below $9.82 (strike less VWAP) by the close on Friday, May 15, when the soon-to-be front-month options expire.

Today's negativity toward BBRY is reflected throughout the Street. During the past two weeks on the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity has amassed a put/call volume ratio of 0.83 -- in the 95th annual percentile.

In a similar vein, 19% of BBRY's float is sold short, which would take roughly seven sessions to buy back, at typical daily trading levels. If that's not enough, 16 of 19 analysts tracking the shares consider them a "hold" or worse.

However, BlackBerry Ltd (NASDAQ:BBRY) has been a long-term technical powerhouse, rocketing 40% over the last 12 months. Should this continue, a capitulation among skeptics could add fuel to BBRY's fire.


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