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Repros Therapeutics Inc (RPRX) Bulls Bet On a Prolonged Rally

Repros Therapeutics Inc is up big today after an otherwise miserable September

by 9/26/2014 2:11 PM
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Repros Therapeutics Inc (NASDAQ:RPRX) is soaring today, up 18.3% to trade at $10.60. Sparking the rally was a successful late-stage study of its low-testosterone drug Androxal, and news of an upcoming meeting to discuss the treatment with the Food and Drug Administration (FDA). Not surprisingly, this has piqued the interest of options traders.

Getting into the details, RPRX calls are trading at five times the normal pace at this point in the session. Also, speculators are latching onto short-term contracts, per the stock's 30-day at-the-money implied volatility -- up 2.5% at 103.5%.

Most active is the out-of-the-money November 12.50 call, where nearly 2,600 contracts are on the tape. It appears these back-month calls are being bought to open, with traders anticipating the equity will move higher over the next couple of months. Specifically, the buyers expect RPRX to be sitting above $12.50 at the close on Friday, Nov. 21, when the options expire.

Today's gains notwithstanding, Repros Therapeutics Inc (NASDAQ:RPRX) has struggled mightily on the charts. Since hitting $22.55 earlier this month -- the stock's highest perch since late January -- the shares have lost more than half of their value.


Most Active Options Update: Twitter Inc (TWTR)

Option bulls are buying to open Twitter Inc's October 50 calls

by 9/26/2014 1:32 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 Twitter Inc (NYSE:TWTR), with options traders gambling on gains.

Most Active Options Table

Twitter Inc is up 1.4% this afternoon to trade at $52.18, as the shares attempt to recover from their year-to-date deficit. In the options pits, short-term contracts are in demand, per the equity's 30-day at-the-money implied volatility (IV), which is up 7.5% to 49.4%. Along those lines, one group of speculators is banking on continued upside for the stock, targeting the in-the-money October 50 call.

Nearly 11,500 contracts are on the tape at this strike. With 85% crossing at the ask price, and IV trending higher, it appears the calls are seeing buy-to-open activity. This theory is partially confirmed by data from the International Securities Exchange (ISE).

In a nutshell, the call buyers are anticipating Twitter Inc (NYSE:TWTR) will sustain its positive momentum, and finish north of the round-number half-century mark at the close on Friday, Oct. 17, when front-month options expire. Delta on the contract was last seen at 0.68, meaning the options market is giving the contract a 68% chance of being in the money at expiration.


AOL, Inc. (AOL) Option Volume Pops

AOL, Inc. options are hot amid M&A hopes

by 9/26/2014 1:00 PM
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The shares of AOL, Inc. (NYSE:AOL) have shot 4.2% higher to $44.77, after spending the first half of the session waffling around breakeven. Volume has skyrocketed on renewed hopes for a merger with Yahoo! Inc. (NASDAQ:YHOO), with roughly 5 million AOL shares already exchanged today -- on pace to be the equity's heaviest-volume day since mid-May. What's more, AOL options are also flying off the shelves at a rapid-fire rate, with speculators rushing to place eleventh-hour bets.

Daily Chart of AOL since May 2014

Overall options volume is running at 10 times the intraday norm, with about 4,000 calls and 2,700 puts exchanged. It looks like short-term option bulls are buying to open the weekly 9/26 44- and 45-strike calls, on hopes that AOL, Inc. (NYSE:AOL) will extend its momentum north of these strikes through the closing bell, when the options expire. Skeptics, meanwhile, appear to be buying to open the October 42 put, amid expectations for AOL to backpedal beneath the strike by the close on Friday, Oct. 17, when front-month options expire.


Most Active Options Update: KB Home (KBH)

One KB Home option trader set her sights even lower

by 9/26/2014 12:57 PM
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The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that 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 KB Home (NYSE:KBH), as one speculator lowers her expectations for the struggling stock.

Most Active Options Table

It's been a terrible week for KB Home, which has surrendered nearly 12% following a dismal earnings report and subsequent round of bearish brokerage notes. The downward momentum is continuing in today's session, with the stock off 1.8% to trade at $15.32. In the equity's options pits, calls are trading at almost 10 times the average intraday pace, but not all of the activity is of the traditional bullish variety.

Specifically, two symmetrical blocks of 13,103 calls changed hands earlier at KBH's October 18 and November 17 strikes. Trade-Alert indicates the front-month calls were bought to close, while the back-month calls were sold to open. Simply stated, this speculator appears to have rolled her short position out one month and down one strike, betting on additional struggles for the stock in the near term.

From a wider sentiment perspective, call selling has been a popular strategy on KB Home (NYSE:KBH) of late. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, traders have sold to open 3.68 calls for each one they've purchased over the past 10 sessions.


Options Radar: BlackBerry Ltd, Pfizer Inc., and Seadrill Ltd

Reviewing notable options activity on BlackBerry Ltd, Pfizer Inc., and Seadrill Ltd

by 9/26/2014 12:03 PM
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Three stocks seeing notable options activity today are smartphone maker BlackBerry Ltd (NASDAQ:BBRY), pharmaceutical concern Pfizer Inc. (NYSE:PFE), and oil-and-gas issue Seadrill Ltd (NYSE:SDRL). Here's a look at how options traders have been placing their bets on BBRY, PFE, and SDRL.

  • BlackBerry Ltd (NASDAQ:BBRY) surged into double-digit territory today -- last seen up 5.5% at $10.34 -- following an upbeat outlook from CEO John Chen. In the stock's options pits, volume has surged to five times what's typically seen at this point in the day. Meanwhile, in the wake of this morning's earnings report, BBRY's 30-day at-the-money (ATM) implied volatility (IV) has plunged 17.1% to 53.1%, prompting speculators to buy to close their October 9.50 puts. Elsewhere, buy-to-open activity has been detected at the equity's December 10 put.

  • Pfizer Inc. (NYSE:PFE) is sitting out the day's broad-market uptrend, after delaying the Phase III trial of GlycoMimetics Inc's (NASDAQ:GLYC) rivipansel drug, due to manufacturing issues. At last check, the stock was off 1.1% at $29.66, yet calls are trading at a 29% mark-up to the average intraday pace, and are outpacing puts by a nearly 3-to-1 margin. A healthy portion day's call volume has centered on PFE's November 32 strike, where a block of 10,000 contracts changed hands earlier at the ask price of $0.16 apiece. According to Trade-Alert, this is most likely opening activity, and could be adding to similar positions initiated on Wednesday. On the charts, PFE hasn't seen the north side of $32 since late April, and as such, delta on the call is docked at a slim 0.12.

  • Seadrill Ltd fell to a nearly three-year low of $26.25 right out of the gate, following a downgrade to "sell" from "neutral" at Goldman Sachs, which cited the likelihood of a dividend cut in 2016. The brokerage firm likewise slashed its price target on the security to NOK 155 from NOK 232. At last check, though, the shares had reversed course, and were trading 1.2% higher at $27.30. In the options pits, puts are crossing the tape at a rate three times the average intraday pace, and the security's 30-day ATM IV hit an annual high earlier. Most active are the November 22 and 25 puts, which were apparently used to initiate long put spread in the back-month series.


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