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Option Trends: Electronic Arts, Monster Beverage, and Oracle

Calls are popular on EA, while puts are in heavy rotation on MNST and ORCL

by 11/27/2012 1:44 PM
Stocks quoted in this article:

Speculators are taking sides on video game specialist Electronic Arts Inc. (NASDAQ:EA - 14.68), energy drink producer Monster Beverage Corporation (NASDAQ:MNST - 51.25), and software stock Oracle Corporation (NASDAQ:ORCL - 31.39), according to volume data from the major options exchanges. While calls have become the contracts of choice on EA, put players are gravitating toward MNST and ORCL. Here's a closer look at the latest trends in the options pits for these three hot stocks.

Starting with EA, speculative investors have bought to open 13,052 calls during the past five sessions, according to the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE). During this same time frame, only 35 puts were bought to open -- netting EA a lopsided five-day call/put volume ratio of 372.91.

EA daily price chartTaking a longer-term look, EA has racked up a 10-day call/put volume ratio of 31.05 on the ISE, CBOE, and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 94% of other such readings taken over the past year, as traders have rarely snapped up calls over puts at a faster pace.

EA has shed roughly 34% of its value over the past 52 weeks, but the stock appears to be on the comeback trail. The shares recently broke out above stubborn resistance at their 160-day moving average, and they're now making a run at the $15 level -- a former site of support that could prove to be a near-term sticking point.

Turning to MNST, options players on the ISE and CBOE have bought to open 1,485 puts and 193 calls over the past week. The equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 5.51 arrives in the 98th percentile of its annual range, pointing to near-peak levels of pessimistically slanted options activity.

MNST has taken a serious haircut since mid-June, when it was flirting with the $80 area, but the stock is enjoying a healthy 11.7% pop in today's trading. Traders seem relieved after the Food and Drug Administration (FDA) today offered some clarity on its plans to review the safety of energy drinks, which has been a source of controversy in recent weeks.

Finally, option bears on the ISE and CBOE have bought to open 3,819 puts on ORCL over the past five sessions, compared to only 1,232 calls. In other words, 3.09 times more puts than calls have been purchased in the last week. From a broader view, ORCL sports a 10-day ISE/CBOE/PHLX put/call volume ratio of 1.10. This ratio ranks above 70% of comparable readings taken over the past year, confirming that bearish bets have been more popular than usual.

On the charts, ORCL recently bounced off support at its 160-day moving average and the $30 level, and the stock is building on its outsized year-to-date gain of 20.7%. Going forward, a capitulation among the bears could provide fresh fuel to propel this technical standout even higher.


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