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Option Trends: Alexion Pharmaceuticals, Starbucks, and VMware

Put players have been targeting ALXN, SBUX, and VMW

by 12/12/2012 2:03 PM
Stocks quoted in this article:

Options traders harbor a bearish bias toward biotech stock Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN - 94.60), coffee chain Starbucks Corporation (NASDAQ:SBUX - 53.83), and virtualization specialist VMware, Inc. (NYSE:VMW - 92.91), according to volume data from the major options exchanges. In recent sessions, puts have emerged as the options of choice on ALXN, SBUX, and VMW, easily outpacing calls in popularity. Here's a closer look at the latest trends in the options pits for these three hot stocks.

First up, speculators have bought to open 1,598 puts on ALXN over the past five days, according to the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE). In this same time frame, only 310 calls have been purchased on the shares, resulting in a lopsided five-day put/call volume ratio of 5.15.

ALXN weekly price chartIn fact, ALXN has now racked up a 10-day put/call volume ratio of 1.25 on the ISE, CBOE, and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 89% of other such readings taken over the past 52 weeks, suggesting a stronger-than-usual preference for puts over calls.

ALXN is up 33.2% year-to-date, but the stock is currently stuck below its 10-week moving average. Going forward, this formerly supportive trendline could switch roles to thwart the equity's rally attempts.

Bears are also keeping a wary eye on SBUX, with 18,940 puts and 9,244 calls bought to open on the ISE and CBOE during the past five days. Now, the Seattle-based java giant sports a 10-day ISE/CBOE/PHLX put/call volume ratio of 1.13, which arrives in the 90th annual percentile. In other words, options players have picked up puts over calls at a faster pace only 10% of the time during the past year.

SBUX has managed to pull together a respectable gain of 15.6% so far in 2012, but the stock is trading just below familiar resistance in the $54-$56 area. This region has served as a stubborn technical ceiling since early May.

Finally, traders on the ISE and CBOE have bought to open 4,342 puts and 211 calls on VMW over the past five sessions, resulting in a put/call volume ratio of 20.58. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 2.64 now registers in the 98th percentile of its annual range, marking a near-peak of bearishly slanted speculation on the tech stock.

Checking out the charts, traders could be betting on VMW to back down from resistance. The shares are perched just below their converging 10-month and 20-month moving averages, both of which are located near the $95 level. The stock has managed only one monthly close above both trendlines since April, so put players could be banking on another rejection from this technical roadblock.


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