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Options Traders Circle Rallying InvenSense Inc (INVN)

InvenSense Inc has popped 8% on unsubstantiated buyout chatter

by 11/18/2014 2:53 PM
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InvenSense Inc (NYSE:INVN) is soaring this afternoon, up 8% at $15.16, amid unconfirmed rumors the company may be a takeover target for Intel Corporation (NASDAQ:INTC) or QUALCOMM, Inc. (NASDAQ:QCOM). In the options pits, calls are flying off the shelves at faster than double the expected intraday rate. Short-term contracts are being targeted, too, per the stock's 30-day at-the-money implied volatility -- up 5% to 59.3%.

Digging deeper, INVN's most active strike is the December 14 put, where 2,812 contracts are on the tape. The vast majority have crossed at the bid price, and volume outstrips open interest, suggesting these bets are being sold to open. In other words, the traders are convinced the shares will maintain their perch atop $14 through the close on Friday, Dec. 19, when the soon-to-be front-month options expire.

Looking at the charts, since July 2013, InvenSense Inc (NYSE:INVN) has ended a week south of $14 just once -- last Friday. As such, delta on the December 14 put is negative 0.31, representing a less than 1-in-3 chance the option will be in the money at options expiration.


Option Bulls Blitz Vipshop Holdings Ltd ADR (VIPS) Ahead of Earnings

Vipshop Holdings Ltd - ADR will report earnings after tonight's close

by 11/18/2014 2:26 PM
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China-based online discount retailer Vipshop Holdings Ltd - ADR (NYSE:VIPS) will take its turn in the earnings confessional after tonight's close, and ahead of the scheduled event, the stock is down 1.3% to $23.68. Option players are paying no mind to today's dip, with calls crossing the tape at nearly four times the average intraday rate. The most active option is VIPS' November 24 call, where it appears a number of speculators are betting on a quick post-earnings bounce.

Specifically, 2,222 contracts have changed hands here -- the majority at the ask price, signaling buyer-driven activity. What's more, implied volatility has soared 12 percentage points, indicating new positions are being initiated.

Losses for today's call buyers are limited to the initial premium paid, should VIPS settle south of the strike at week's end, when front-month options expire. Gains, meanwhile, are theoretically unlimited north of breakeven at $24.74 (strike plus the volume-weighted average price of $0.74) -- a mark that sits just 6 cents away from the stock's all-time high of $24.80, tagged on Nov. 11.

Today's accelerated call activity is just more of the same toward a stock that's almost tripled in value year-to-date. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, VIPS' 10-day call/put volume ratio of 1.97 ranks just 9 percentage points from an annual bullish peak.

Looking at the numbers, VIPS' post-earnings price action tends to favor bulls. In fact, over the past four quarters, the stock has averaged a gain of 10.9% in the session subsequent to reporting. This time around, the options market is projecting a roughly 9% move, but considering the November 23.75 put is pricing in higher implied volatility than the call (107.5% vs. 102.7%), it appears the action is expected to resolve to the downside.


Most Active Options Update: Intel Corporation (INTC)

Short-term options are hot on Intel Corporation

by 11/18/2014 1:10 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 tech concern Intel Corporation (NASDAQ:INTC), which is among the best-performing Dow components this afternoon.

Most Active Options Table

Intel Corporation is up 1.6% at $34.78 -- second to only UnitedHealth Group Inc. (NYSE:UNH) among Dow-listed stocks -- after the firm said its new luxury smart bracelet will hit the shelves early next month, just in time for the holidays. The My Intelligent Communication Accessory (MICA) bracelet -- developed by INTC and Opening Ceremony -- will be compatible with Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOGL) sites, and its $495 price tag comes with AT&T Inc. (NYSE:T) wireless service for two years, as well as its own phone number.

Against this backdrop -- and with Intel's annual investor day on Thursday -- option traders are gambling on the equity's short-term trajectory. Overall options volume is running at a 46% mark-up to the average intraday pace, though calls are once again outpacing puts.

Digging deeper, bulls are circling INTC's November 35 call, which is the most active option thus far. Of the roughly 17,600 contracts traded, almost three-quarters have done so on the ask side, and implied volatility (IV) has jumped 4.5 percentage points at the strike. In other words, it appears speculators are buying the contracts to open, amid hopes for INTC to power north of $35 by the close on Friday, when front-month options expire.

On the flip side, skeptics have honed in on the November 34 put, which has seen more than 16,100 contracts change hands -- primarily on the ask side. Volume has surpassed open interest at the strike, and IV is 6 percentage points higher, hinting at newly bought bearish bets. By purchasing the puts to open, the speculators expect INTC to backpedal south of $34 by Friday's close.

No matter the outcome, the most the option buyers are risking is the initial premium paid for their contracts. In light of Intel Corporation's (NASDAQ:INTC) pop, delta on the call has surged to 0.43 from 0.27 at yesterday's close, suggesting a 43% chance of expiring in the money. Likewise, delta on the put has dropped to negative 0.26 from negative 0.41, pointing to narrower odds for an in-the-money finish.


Options Radar: SunEdison, Potash Corp./Saskatchewan, and Alibaba Group

Reviewing notable options activity on SunEdison Inc, Potash Corp./Saskatchewan (USA), and Alibaba Group Holding Ltd

by 11/18/2014 11:21 AM
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Option traders have taken a shine to silicon wafer maker SunEdison Inc (NYSE:SUNE), fertilizer firm Potash Corp./Saskatchewan (USA) (NYSE:POT), and Chinese e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA). Here's a look at how speculators have been placing their bets on SUNE, POT, and BABA.

  • SunEdison Inc (NYSE:SUNE) is 23.8% higher at $20.57, thanks to news that the company is dipping its toes into the world of wind power. Specifically, the firm and TerraForm Power Inc (NASDAQ:TERP) -- its publicly traded subsidiary -- said they're buying Boston-based First Wind for up to $2.4 billion. As a result, option traders are blitzing SUNE, especially on the call side of the aisle. Intraday call volume is running at 16 times the average pace, and the stock's 30-day at-the-money (ATM) implied volatility (IV) has rocketed 12.7% to 65.6%, reflecting a growing demand for short-term contracts. Digging deeper, it looks like bulls may be buying to open the December 19 call, amid hopes for SUNE to extend its rally north of $19 through the close on Friday, Dec. 19, when the soon-to-be front-month options expire. The preference for calls over puts marks a shift in sentiment among buyers, as SUNE's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 1.59 -- just 7 percentage points from an annual bearish acme.

  • Potash Corp./Saskatchewan (USA) (NYSE:POT) is up 4.9% at $35.44, after Russian potash miner Uralkali OAO suspended work and evacuated personnel from a mine upon detecting elevated levels of brine inflow. Against this backdrop, several agricultural names are in the black, and POT is especially popular among option bulls. Intraday call volume is running at 21 times the typical rate, and has outpaced put volume by a margin of roughly 7-to-1. The equity's 30-day ATM IV has popped 4.2% to 19.9%, as traders take a shine to short-term options. Specifically, potential buy-to-open activity has been detected at the weekly 12/12 35-strike call, as well as the December 34 and 36 calls. The affinity for bullish bets is relatively rare for POT, as the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.20 stands higher than 85% of all other readings from the past year.

  • Finally, Alibaba Group Holding Ltd (NYSE:BABA) is bucking the broad-market trend higher, down 3.1% at $110.71. Since touching a record high of $120 last Thursday, the shares of BABA have backpedaled 7.7%, and are in danger of ending south of their 10-day moving average for the first time since Oct. 15. Nevertheless, calls have more than doubled puts today, and are trading at nearly twice the usual intraday clip. The stock's 30-day ATM IV has edged 1.9% higher to 40.7%, with short-term traders buying to open the November 113 call, amid hopes for BABA to climb back atop $113 by Friday's close, when front-month options expire.


GoPro Inc (GPRO) Rally Sparks a Rush of Call Activity

GoPro Inc calls are trading at nearly three times the intraday average

by 11/18/2014 10:45 AM
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GoPro Inc (NASDAQ:GPRO) has rallied 3.8% this morning to linger near $84.56, following news the company has upped its secondary share offering. Option traders are responding in kind, scooping up GPRO calls at a rate nearly three times the intraday average.

Drilling down, GPRO's November 85 call has seen the most action, with 2,745 contracts on the tape at last check. The majority of these contracts have changed hands at the ask price, and implied volatility has jumped 4.9 percentage points, hinting at the possibility new positions are being purchased. Amid today's surge, delta on the call has jumped to 0.47 from 0.27 at last night's close, indicating an increased probability the option will be in the money at Friday's close, when the front-month contracts expire.

Looking outside of the options pits reveals not everyone is as upbeat toward a stock that's roughly tripled in value since going public in late June, thanks to a number of big moves to the upside. In fact, roughly 73% of analysts covering the shares maintain a "hold" or "strong sell" suggestion, while the consensus 12-month price target of $81.60 stands at a discount to current trading levels. Should GoPro Inc (NASDAQ:GPRO) continue to outperform, a round of upgrades and/or price-target hikes could help propel the shares higher.


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