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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.


Abercrombie & Fitch Co. (ANF) and the $260,000 Earnings Bet

Abercrombie & Fitch Co. (ANF) will report earnings tomorrow morning

by 3/3/2015 2:20 PM
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Abercrombie & Fitch Co. (NYSE:ANF) is set to report earnings bright and early tomorrow. Ahead of this, expectations are ramping up for a big post-event move, as the stock's 30-day at-the-money implied volatility earlier hit a 52-week high of 68.4%.

Digging deeper, ANF calls are running fast and furious, with 14,000 contracts on the tape -- roughly four times the expected intraday amount. According to Trade-Alert, one speculator initiated a long call spread at the weekly 3/13 25.50 and 28.50 strikes for a total net debit of nearly $260,000 (3,000 contracts * $0.86 net debit * 100 shares per contract), gambling on a move north of $28.50 by next Friday's close -- when the weekly series expires.

Historically speaking, ANF has made some solid moves to the upside following recent quarterly reports. In fact, over the last four quarters, the shares have averaged a 4% gain in the session subsequent to these events -- including an 11.3% jump one year ago.

Still, pessimism prevails on the Street. ANF's 50-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 2.19, which rests just 4 percentage points from an annual peak. What's more, almost 29% of the stock's float is sold short, and it would take more than seven sessions to cover these bets, at the security's average daily trading levels.

This isn't terribly surprising, though. Abercrombie & Fitch Co. (NYSE:ANF) is a long-term technical laggard. With the shares down 1.2% this afternoon at $24.12 -- due to a pair of early price-target cuts -- they're now staring at a year-over-year deficit of more than 42%.

Daily Chart of ANF since March 2014


Leap Reveal Has BlackBerry Limited (BBRY) Traders Active

BlackBerry Ltd (BBRY) unveiled its new handheld, the Leap, this morning

by 3/3/2015 1:45 PM
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BlackBerry Ltd (NASDAQ:BBRY) is rallying after earlier debuting its new touchscreen handheld called the Leap. At last check, the stock was up 1.3% at $11.19. Meanwhile, in BBRY's options pits, traders are taking sides -- with some once again gambling on a move higher, and others exhibiting doubts.

Currently, BBRY options are trading nearly double the usual rate for this point in the session. Buy- and sell-to-open activity is transpiring at the weekly 3/6 11.50-strike call. By purchasing the out-of-the-money contracts, traders expect the underlying to topple $11.50 by this Friday's close, when the series expires. By contrast, the call writers are wagering on a short-term ceiling. In today's session, BBRY has surged as high as $11.45.

Meanwhile, a number of option bears are rolling the dice on a pullback for the shares. Specifically, traders are buying to open BBRY's April 11 put, in the hopes that the equity will breach $11 by the close on Friday, April 17, when the back-month options cease trading.

On the charts, BlackBerry Ltd (NASDAQ:BBRY) has been on a tear since late February, helped last week by news of a partnership with Google Inc (NASDAQ:GOOGL). Specifically, since Feb. 20, when the shares closed at $10.27, BBRY has surged 9%.


GoPro, Inc. (GPRO) Bulls Aren't Sweating the Competition

GoPro Inc (GPRO) is trying to fend off a new rival

by 3/3/2015 1:23 PM
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Lately, the buzz surrounding GoPro Inc (NASDAQ:GPRO) hasn't been about what it's done, but more about what its competitors are doing. A few weeks ago, Apple Inc.'s (NASDAQ:AAPL) patent news put the camera maker on high alert. In more recent sessions, concerns have arisen that the company could face pressure due to new competition from Xiaomi's Yi Action Camera, which sells for roughly half the price of the GoPro Hero. Regardless, call volume this afternoon is still twice that of put volume in the stock's options pits.

GPRO's most popular option is the weekly 3/6 40-strike call. Buy-to-open activity has been detected here, as traders look to profit on a move above the contract's breakeven price of $41.41 (strike plus volume-weighted average price of $1.41) by the close this Friday, when the weekly series expires.

Traders snatching up GPRO calls is nothing new. During the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 2.23 calls for each put. However, short interest rose 27.6% during the latest reporting period, suggesting some of these long calls may have been at the hands of short sellers hedging.

On the charts, the shares have been hurting more than Derek Rose this year. GoPro Inc (NASDAQ:GPRO) ended 2014 at $63.22, and has since lost 37%. Today, though, the equity is 0.3% higher at $40.

Daily Chart of GPRO Since December


Does Orexigen Therapeutics, Inc. (OREX) Have Room to Run?

Orexigen Therapeutics, Inc. (OREX) short sellers could be feeling the heat

by 3/3/2015 12:54 PM
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Orexigen Therapeutics, Inc. (NASDAQ:OREX) is the biggest gainer on the Nasdaq today, up 53% at $8.85. In fact, the equity notched a fresh four-year high of $9.37 in the wake of encouraging data on its obesity drug, Contrave, and OREX options are in demand as speculators roll the dice on even higher highs in the near term.

The equity's 30-day at-the-money implied volatility has skyrocketed 76.7% to 103.2%, reflecting the surging demand for short-term contracts. Overall options volume is running at 40 times the average intraday pace, with calls more than doubling puts.

Most popular is the March 9 call, which traders are buying to open to profit on gains north of $9 by the close on Friday, March 20, when front-month options expire. By purchasing the calls at a volume-weighted average price (VWAP) of $0.42, the buyers will make money if OREX rallies north of $9.42 (strike plus VWAP) by expiration. In light of the stock's ascent, delta on the call has soared to 0.51 from 0.076 at yesterday's close, implying a roughly 51% chance of the contract expiring in the money.

Today's appetite for OREX calls is just more of the same, though. 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 19.16 stands higher than 76% of all other readings from the past year.

However, short interest accounts for more than one-third of OREX's total available float. In fact, it would take more than a month to buy back these bearish bets, at the stock's average daily trading volume. Against this backdrop, it's possible some of the recent call buying -- especially at out-of-the-money strikes -- could be attributable to bears looking for a hedge (and for good reason, considering today's rally).

On the charts, Orexigen Therapeutics, Inc. (NASDAQ:OREX) is now 48% higher year-to-date, and is on the verge of filling its February 2011 bear gap. What's more, the equity is on pace to end atop its 10-month and 20-month moving averages for just the second time since May.


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