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ConAgra Foods, Inc. (CAG) Bulls Keep Their Appetite

ConAgra Foods Inc (CAG) calls are still popular despite a price-target cut

by 3/4/2015 12:05 PM
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Options traders are rushing ConAgra Foods Inc (NYSE:CAG) today, after Bernstein -- which raised its price target on sector peer Kraft Foods Group Inc (NASDAQ:KRFT) -- cut its price target on the shares by $1 to $30. The stock's 30-day at-the-money implied volatility earlier hit an annual high of 25.2%, revealing surging interest in short-term contracts. What's more, even with the price-target reduction, CAG calls are changing hands at a pace 35 times what's normally seen at this point in the day, beating out puts by a margin of more than 11-to-1.

Digging into the data, the option seeing the most action by far is CAG's March 36 call, where over 6,100 contracts have crossed -- 4,000 more than the next closest option. Traders are buying to open these contracts, betting on CAG to eclipse $36 before front-month options cease trading, at the close on Friday, March 20. Looking back, the stock hasn't traded above $36 since Feb. 12, prior to a management shake-up and forecast reduction.

The security's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio comes in at 6.12, so it's clear calls have been the options of choice among CAG speculators for several months now. On top of this, that ratio outstrips 82% of all similar readings from the past year.

Calls have remained popular despite ConAgra Foods Inc's (NYSE:CAG) sluggish performance on the charts. Since hitting a 17-year high of $37.46 on Dec. 11, the equity is off 8%. Today, the shares are 1.3% lower at $34.50, amid reports the company is a split-up candidate.

Daily chart of CAG Since December 2014

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FireEye, Inc. (FEYE) Bears Bet On a Pullback

FireEye Inc (FEYE) puts are trading at three times the usual intraday clip

by 3/4/2015 11:25 AM
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Cybersecurity titan FireEye Inc (NASDAQ:FEYE) is succumbing to broad-market headwinds today, down 2.7% at $43.86. What's more, despite the stock's longer-term uptrend -- the shares are 39% higher in 2015 -- option players continue to gamble on a steep pullback.

FEYE puts are trading at three times the average intraday clip, with the April 43 put leading the charge. The International Securities Exchange (ISE) confirms a big block of the puts was bought to open, as the trader expects FEYE to make a notable move south of $43 by the close on Friday, April 17, when the back-month options expire.

However, today's preference for bearish bets is nothing new for FEYE. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.00 stands higher than 99% of all other readings from the past year, implying short-term traders have rarely been more put-biased.

As alluded to earlier, FireEye Inc (NASDAQ:FEYE) has been outstanding on the charts, outperforming the broader S&P 500 Index (SPX) by nearly 46 percentage points during the past three months. As such, the equity's 14-day Relative Strength Index (RSI) now sits at 67 -- in overbought territory, suggesting the equity's breather may have been in the cards. Off the charts, FEYE is presenting this afternoon at a Morgan Stanley tech conference.


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Amazon.com, Inc. (AMZN) Bombarded by Last-Minute Bulls

Bullish analyst attention brings in a wave of Amazon.com, Inc. (AMZN) call buyers

by 3/4/2015 10:59 AM
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Amazon.com, Inc. (NASDAQ:AMZN) saw its price target raised to $425 from $380 at Baird, which reiterated its "outperform" rating. Even though the equity was last seen 0.1% lower at $384.27, speculators are betting on upside in the near term, with calls crossing at an accelerated clip today. Specifically, AMZN's weekly 3/6 series is in high demand, as each of the stock's 10 most popular contracts expires at the close this Friday.

The security's most popular contract is the weekly 3/6 390-strike call, where buy-to-open activity has been detected. Speculators purchasing these contracts are betting on AMZN to top $390 before the contracts expire at Friday's close. Delta on the option is 0.27, meaning it has a roughly 1-in-4 chance of moving into the money by expiration.

Going by what's normally seen in AMZN's option pits, it's unusual for short-term speculators to prefer calls over puts. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.43 ranks in its 95th annual percentile. This tells us the security's near-term options traders have preferred puts over calls by a wider margin only 5% of the time in the past year.

Amazon.com, Inc. (NASDAQ:AMZN) has been running on all cylinders this year. The shares boast a year-to-date lead of nearly 24%, much of which came from a post-earnings bull gap in late January. Now, it appears AMZN has found a foothold atop its 10-day moving average, currently located at $382.55.


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Why Kroger Co (KR) Could Be Due for Some Post-Earnings Upside

Kroger Co (KR) is scheduled to report earnings bright and early tomorrow

by 3/4/2015 10:40 AM
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Kroger Co (NYSE:KR) is slated to take its turn in the earnings confessional ahead of tomorrow's open, and put players have set their sights on the stock in the lead-up to the big event. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KR's 50-day put/call volume ratio of 0.28 ranks in the 86th annual percentile. Simply stated, puts have been bought to open over calls at a faster-than-usual clip.

In today's trading, puts are crossing the tape at a rate nine times the intraday average. It appears one speculator in particular is adjusting her bearish bet, as she braces for a steep post-earnings plunge. Specifically, it seems as if this trader rolled her long March 65 put down to the 62.50 strike, as she gambles on KR breaching the $62.50 mark by the close on Friday, March 20, when front-month options expire.

Meanwhile, put buyers have been willing to pay a pretty penny for their pre-earnings bets. For starters, the stock's 30-day at-the-money implied volatility of 26.2% rests in the 99th percentile of its annual range. Plus, KR's Schaeffer's Volatility Index (SVI) of 29% ranks higher than 64% of similar readings taken in the past year. In other words, premium on the equity's front-month options is currently pricing in heightened volatility expectations.

Technically speaking, KR has been a standout over the past 52 weeks, boasting a 58.4% lead. What's more, after hitting a record peak of $73.60 on Feb. 18, the stock has more recently been consolidating atop its 10-week moving average -- a trendline that has ushered KR higher since February 2014 -- to trade at $69.24. Should the shares extend this long-term momentum post-earnings, an unwinding of skepticism both in and out of the options pits could help fuel Kroger Co's (NYSE:KR) fire.

Weekly Chart of KR Since February 2014 With 10-Week Moving Average

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Twitter, Inc. (TWTR) Calls Continue to Woo Traders

Twitter Inc (TWTR) calls have been popular the past two weeks

by 3/3/2015 2:31 PM
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Twitter Inc (NYSE:TWTR) call buyers have been running rampant in the stock's options pits lately. Proof lies in the data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Across this trio of exchanges, the equity's 10-day call/put volume ratio is at an annual high of 4.45. To clarify, speculators have bought to open TWTR calls over puts at the fastest rate in the past 52 weeks.

Today, speculators are taking a keen interest in the security's near-term contracts, as seven out of its 10 most popular options expire this Friday. One contract seeing notable attention is the weekly 3/6 49.50-strike call, which traders are buying to open, betting on TWTR to break through $49.50 by week's end.

Shifting gears, analysts are split on the shares. At the moment, 13 covering brokerage firms deem TWTR a "strong buy," yet the remaining 12 analysts tracking the stock say it's a "hold" or worse.

Twitter Inc (NYSE:TWTR) has been on fire lately. The stock has added 33% in 2015, thanks to an earnings-induced bull gap on Feb. 6. At last check, the shares were 1% lower at $47.64.


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