Energy Recovery, Inc. (NASDAQ:ERII) has skyrocketed 181.5% to $6.90, and earlier touched a six-year high of $8.16, after the company inked a $125 million deal with Schlumberger Limited (NYSE:SLB). Against this backdrop, ERII options volume has skyrocketed to more than 400 times the norm, with traders betting on even more short-term upside.

In the wake of the equity's surge, its at-the-money implied volatility soared to a 52-week high of 143%, and was last seen 56.7% higher at 133.8%. ERII calls have more than doubled puts thus far, with the November 7.50 call attracting the most attention.

It looks like a handful of speculators are buying the contracts to open at a volume-weighted average price (VWAP) of $1.07, meaning they'll profit the higher the stock climbs atop $8.57 (strike plus VWAP) by the close on Friday, Nov. 20, when front-month options expire. Delta on the call sat at zero yesterday, as the options were so far out of the money, but has since surged to 0.48, implying the contracts have about a 1-in-2 shot of expiring in the money.

Outside of the options pits, a short squeeze could be helping Energy Recovery, Inc. (NASDAQ:ERII). Short interest represents 7.4% of the stock's total available float, representing roughly 36 sessions' worth of pent-up buying demand, at ERII's average pace of trading.

Amazon.com, Inc. (NASDAQ:AMZN) announced it will be hiring 100,000 employees for the holiday season. This is in addition to the 25,000-plus full-time workers the company's brought on in recent months. The news has failed to give the stock a lift, though, last seen off 1.8% at $565.81 -- and catching the attention of short-term option bears.

So far, one of AMZN's most active options is the weekly 10/23 560-strike put, where buy-to-open activity is detected. In other words, these speculators are wagering on the stock breaching the underfoot strike by this Friday's close -- when the weekly series expires -- or risk losing the initial premium paid. Stepping back, the deeper out-of-the-money weekly 10/23 532.50-strike put has seen the biggest increase in open interest over the past 10 sessions, adding over 3,000 contracts -- at least some of which were bought to open, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

In fact, option buyers have displayed a pronounced preference for puts over calls during the past several months. AMZN's 50-day ISE/CBOE/PHLX put/call volume ratio of 1.08 rests just 4 percentage points from an annual high.

By contrast, the brokerage bunch is extremely optimistic toward the shares. Of the 28 analysts tracking AMZN, 22 have doled out "buy" or better assessments, with not a single "sell" opinion to be found. This isn't particularly surprising, though, given the fact the equity's rocketed over 83% higher year-to-date.

In other news, Amazon.com, Inc. (NASDAQ:AMZN) is firing back at The New York Times, following the latter's damning article in mid-August, which criticized the e-tailer's work culture. Specifically, an AMZN spokesperson blogging on Medium said the reporters should have "checked their facts." Looking ahead, the company is slated to report earnings this Thursday evening.

According to industry buzz, Monster Beverage Corporation (NASDAQ:MNST) is being tested in some McDonald's Corporation (NYSE:MCD) stores. One Evercore ISI analyst said the opportunity could translate into more than $1 billion in incremental revenue. Shares of MNST are 5.2% higher at $139.53, and option traders are displaying a relatively rare penchant for calls over puts.

At last check, call volume is running 13 times the daily norm. Furthermore, call activity has tripled put volume so far, with the weekly 10/23 136- and 140-strike calls the most active.

The stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at 1.27, which is higher than 78% of the readings taken during the past 52 weeks. In other words, during the past two weeks, traders have bought to open MNST puts over calls at a faster-than-usual clip. If the stock's run higher prompts these pessimists to hit the exits, MNST could enjoy added tailwinds. 

Technically, Monster Beverage Corporation (NASDAQ:MNST) has performed well -- tacking on 28.8% year-to-date. In light of today's surge, the stock is on pace to end the week atop its 10-week moving average for the first time since mid-August, and could be aiming to retest record-high territory -- and extend its string of solid fourth quarters. 

Even amid turmoil on the fundamental front, Facebook Inc (NASDAQ:FB) is 0.4% higher today at $98.90, and even touched a record high of $99.59 earlier. Apparently, Wall Street isn't too concerned about an investigation from Ireland's Data Protection Commissioner, who will look into whether the company has handed over user information to the U.S. government. The social media firm denies ever doing so, and says it will comply fully with the probe. 

There's likely one group of traders hoping the news has a negative impact on the stock. Looking at data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), FB's 10-day put/call volume ratio of 0.56 ranks in the 88th percentile of its annual range. This means puts have been bought to open over calls at a faster-than-usual rate in the past two weeks. 

It's a different story today, though. FB calls are crossing at twice the normal midday pace, as traders bet on higher highs from the social media stock by buying to open the weekly 10/23 100- and 101-strike calls. By purchasing the contracts, the speculators expect the shares to topple the strikes by week's end, when the weekly series expires. 

Still, there's been a noticeable uptick in pessimism outside the option pits in recent weeks. During the two most recent reporting periods, short interest on FB has increased by over 37%. 

On the other hand, analysts are steadfastly in the bulls' lane. FB boasts 22 "buy" or better ratings, six "holds," and zero "sells." Plus, the security's consensus 12-month price target stands at $112.35 -- a 13.6% premium to current levels, and territory never before charted. 

Looking at the charts, analysts' positions seem to make more sense, based on Facebook Inc's (NASDAQ:FB) technical history. With today's gains, the shares are now nearly 27% higher year-to-date. Furthermore, since jumping from its 200-day moving average roughly two months ago, FB has outperformed the S&P 500 Index (SPX) by nearly 12 percentage points. 

The Tradeable VIX Complex continues to grow and grow. Each time we get a CBOE Volatility Index (VIX) pop, there are more products to trade -- and more liquidity in those products. Our newest addition(s)? Weekly VIX futures and options.

So, is it time to preemptively blame the popularity of All Things VIX for the next market ugliness? This, from Bloomberg:

"Some argue that the explosion in the popularity of volatility trading is now feeding on itself. The rise of volatility-related strategies and exchange-traded products is laid bare in a new report from Chris Cole, founder of the Austin, Texas-based volatility investment-management firm Artemis Capital. He contends that the era of central bank-induced complacency may have created a wild new market force. 

'The great unknown is that this massive short volatility animal that appears tame given a regular diet of central bank liquidity may turn wild when that liquidity is removed,' he wrote in a research note (PDF).

At issue is the degree to which low interest rates and unconventional monetary policies from the world's central banks have encouraged investors to sell volatility as a way to prop up returns while they bet on the continuation of the so-called central bank 'put.' The strategy has paid off in recent years."

OK, it's not that much of an unknown. We literally saw this happen in late August. VIX lifted at record speed, and it's safe to say a lot of that had to do with trapped volatility shorts covering their positions. It was a classic short vol. squeeze, something we've seen at times since the invention of the put option. The dynamics didn't change, just the vehicles to trade.

Easy Central Bank Money is always a convenient scapegoat, but I don't believe you really need a proximal "cause" here. That's not what causes traders of various sizes and stripes to go short volatility. Quite simply, it's the fact that volatility overprices the actual risks. We've mentioned that in this space about 1,000 times.

Here's a quick refresher: Implied volatility trades at a premium to realized volatility -- typically about a 4-volatility-point premium. VIX futures virtually always trade in contango, meaning the futures themselves trade at ever higher levels the further you go out in time. They almost all trade at a premium to VIX itself.

It all works splendidly… until there is a sizable move in the wrong direction.

All markets ultimately find an equilibrium, and this one does too. If shorting vol. becomes too popular, prices will drop. And if prices drop too far, shorting vol. won't work anymore. You can make a case that's happened over the past year or two. The trade maybe got too crowded, traders got burned badly in August, rinse, repeat. And over time that will have the effect of rising prices. And so on.

My point is, this is all Market Dynamics 101. VIX shorting is essentially open ended, so yes, it can cause a cascade. So is put selling, and that market is still way larger than the vol. market. You'll get some shakeouts, but prices will simply rise over time until we get away from equilibrium the other way. Same as it ever was. There's nothing about VIX trading that's at all likely to cause any extra pain.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.

Fitness stocks are rallying amid Oprah Winfrey's $43.2 million investment in Weight Watchers International, Inc. (NYSE:WTW). Among the equities benefiting is Fitbit Inc (NYSE:FIT), maker of exercise-tracking wristbands. The shares were last seen 1.3% higher at $37.37, and option traders have taken notice.

Diving right in, FIT calls are changing hands at 1.9 times the expected intraday rate -- and nearly double the pace of puts. Around midday, it looks like one trader bought to open three blocks totaling 3,460 February 2016 30-strike puts near the prevailing ask price, and sold to open three matching lots of February 2016 45-strike calls closer to the bid price, in what appears to be a risk-reversal play. The transactions at both strikes were accompanied by stock trades totaling about 193,000 FIT shares, pointing to a delta-hedged trade.

One group that's decidedly bearish toward FIT is short sellers. In fact, during the most recent reporting period, short interest shot 21.6% higher, and now makes up 10.7% of the stock's total float.

On the charts, Fitbit Inc (NYSE:FIT) has been in decline mode since topping out at a record high of $51.90 in early August, losing 28%. While the shares have displayed strength today, they've lost momentum around their descending 60-day moving average, which rejected FIT's breakout attempt in mid-September.

Major economic news is light this week, so earnings reports will continue to dominate. In fact, no fewer than 12 Dow components will be stepping into the spotlight: American Express (AXP), Boeing (BA), Caterpillar (CAT), Coca-Cola Co (KO), International Business Machines (IBM), McDonald's (MCD), Microsoft (MSFT), Procter & Gamble (PG), Travelers Companies (TRV), United Technologies (UTX), Verizon Communications (VZ), and 3M Co (MMM) are all slated to reveal results. 

Below is a brief list of some key market events scheduled for the upcoming week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday, 10/19

The week kicks off with the National Association of Home Builders (NAHB) housing market index. IBM will lead a group including Halliburton (HAL), Hasbro (HAS), Morgan Stanley (MS), Sonic (SONC), and Valeant Pharmaceuticals (VRX) into the earnings confessional.

Tuesday, 10/20

Tuesday's economic docket remains light, with only the release of building permits and housing starts on tap. Along with reports from TRV, VZ, and UTX, the earnings schedule also includes Cepheid (CPHD), Chipotle Mexican Grill (CMG), Cree (CREE), Harley-Davidson (HOG), Illumina (ILMN), Intuitive Surgical (ISRG), Lockheed Martin (LMT), VMware (VMW), and Yahoo! (YHOO).

Wednesday, 10/21

Wednesday brings us our weekly peek at domestic crude inventories. Dow components AXP, BA, and KO headline the day's slate of earnings reports -- which also includes Angie's List (ANGI), ARM Holdings (ARMH), Baker Hughes (BHI), Biogen (BIIB), Citrix Systems (CTXS), eBay (EBAY), EMC (EMC), General Motors (GM), Kinder Morgan (KMI), Las Vegas Sands (LVS), SanDisk (SNDK), and Texas Instruments (TXN).

Thursday, 10/22

Thursday is the heaviest data day, featuring weekly jobless claims, existing home sales, and the Conference Board's index of leading economic indicators.

MMM, CAT, MCD, and MSFT will spearhead the day's earnings parade. The blue-chip quartet will be accompanied by the likes of Alphabet (GOOGL), Amazon.com (AMZN), AT&T (T), Apollo Education Group (APOL), Cypress Semiconductor (CY), Dow Chemical (DOW), Dunkin Brands (DNKN), Eli Lilly (LLY), Freeport-McMoRan (FCX), Juniper Networks (JNPR), Nasdaq (NDAQ), Pandora Media (P), PulteGroup (PHM), Raytheon (RTN), Royal Caribbean (RCL), Sirius XM Radio (SIRI), Southwest Airlines (LUV), and Under Armour (UA).

Friday, 10/23

The sole economic report on Friday is Markit's flash purchasing managers manufacturing index (PMI). Companies stepping into the earnings confessional include Dow conglomerate PG, American Airlines Group (AAL), Cabot Oil & Gas (COG), Lear (LEA), Tenneco (TEN), and V.F. Corp (VFC).

Stocks in Asia traded mostly higher today, following Wall Street's bullish lead. Ahead of Monday's third-quarter gross domestic product (GDP) release from Beijing, which is expected to show decelerating mainland growth, traders in both China and Japan priced in expectations for additional stimulus measures. As a result, the Shanghai Composite tacked on 1.6% by the close, and strung together two consecutive weekly gains for the first time since August. Meanwhile, Japan's Nikkei rose 1.1% and Hong Kong's Hang Seng advanced 0.8%. On the other hand, continued strength in the won pressured South Korean exporters, with the Kospi ending down 0.2%.

The gains are milder over in Europe, where traders are weighing heightened expectations for accommodation by global central banks against a mixed bag of equity news. Automakers are on the upswing after positive September sales data, and an uptick in oil prices is boosting energy names. However, the luxury goods sector continues to suffer after Hugo Boss cut its guidance in response to soft China sales, while food heavyweight Nestle has declined after trimming its own full-year outlook. At midday, London's FTSE 100 is up 0.5%, the French CAC 40 has edged 0.4% higher, and the German DAX has gained 0.2%.

Analysts are weighing in today on GPS firm Garmin Ltd. (NASDAQ:GRMN), healthcare concern HCA Holdings Inc (NYSE:HCA), and oil-and-gas company Schlumberger Limited (NYSE:SLB). Here's a quick roundup of today's brokerage notes on GRMN, HCA, and SLB.

• GRMN is down 14.3% this afternoon at $31.70, and earlier hit a multi-year low of $31.68, after providing disappointing preliminary third-quarter results. This news prompted a round of bearish notes on Garmin Ltd., including a Dougherty & Company downgrade tto "neutral" from "buy," a Citigroup price-target cut to $30 from $35, and an RBC price-target cut to $40 from $46. Technically, GRMN is on a direct path lower, having shed 44.5% since hitting its 2015 peak of $57.16 in February. While the stock slumps, option players have stocked up on calls. GRMN's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) checks in at a hefty 12.00, which ranks in the 92nd annual percentile. Likewise, that ratio's 50-day counterpart sits at 3.56, in the 81st percentile. If today's news (or GRMN's final third-quarter results, scheduled for Wednesday, Oct. 28) causes this bullish sentiment to unwind, the stock may be facing further losses.


• HCA has dropped 6.3% to $71.25 today, after it followed GRMN's lead and disappointed Wall Street with its third-quarter earnings projections. Analysts climbed over each other to issue price target cuts; Bank of America/Merrill Lynch cut its target to $95 from $110, Jefferies lowered its target to $88 from $112, UBS dropped its target to $88 from $106, Oppenheimer sliced its target to $100 from $105, and Mizuho Securities dropped its target to $86 from $103. HCA Holdings Inc. has lost 25.4% since July's record high of $95.49, and is now at risk of ending the month below support at its 20-month moving average. Option players are bullishly aligned toward the hospital holding company, as its 10-day ISE/CBOE/PHLX call/put volume ratio of 7.36 ranks in the 92nd percentile of all other readings taken in the past year. Plus, analysts dish out 15 "strong buys" and two "buys" out of 20 total ratings. A capitulation in the option pits or downgrades could serve to push the shares lower. 


• SLB is set to slip into the earnings confessional after the closing bell sounds today -- and it appears that some analysts wanted to get ahead of a potential disappointment. Following Tuesday's price-target cut, Baird yesterday cut Schlumberger Limited's price target to $99 from $105. And today, SocGen mirrored that move by cutting the oil-and-gas firm's price target to $90 from $104 -- but after three straight days of negative notes, the stock is 0.6% higher at $75.44 in reaction to this news. Analysts are bullishly aligned ahead of this afternoon's report, with 19 of the 27 tracking SLB rating it a "buy" or better. Should today's report disappoint, we could see a wave of downgrades push the stock lower. The options pits also hold further optimism, as SLB's 10-day call/put volume ratio on the ISE, CBOE, and PHLX checks in at 1.54, which ranks higher than 94% of comparable readings from the past year.

For other stocks in analysts' crosshairs, read Analyst Upgrades: Facebook Inc, Xilinx, Inc., and Nike Inc and Analyst Downgrades: Netflix, Inc., Achillion Pharmaceuticals, Inc., and Wal-Mart Stores, Inc.

The Dow is flirting with the 17,000 level this afternoon, amid the most recent round of blue-chip earnings. Tomorrow, benchmark component General Electric Company (NYSE:GE) will keep the party going when it takes to the confessional bright and early. Meanwhile, large-caps Honeywell International Inc. (NYSE:HON) and SunTrust Banks, Inc. (NYSE:STI) are also set to report Friday morning. Below, we'll take the pre-earnings temperature of GE, HON, and STI.

• Over the past eight quarters, GE has posted a single-day post-earnings move of 1.5%. This time around, the options market is pricing in a slightly bigger 2.3% move, based on near-term at-the-money straddle data. Still, the stock's short-term options can be had at a relative bargain, considering its Schaeffer's Volatility Index (SVI) of 21%, which sits lower than 71% of comparable readings from the past year.
  
  Based on numbers from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders expect tomorrow's action to resolve to the downside. During the last 10 weeks across those exchanges, GE has amassed a put/call volume ratio of 0.68 -- in the 78th annual percentile. This may come as a surprise, considering the equity's 10.7% year-to-date advance at $27.97 -- just a chip-shot away from April's seven-year high of $28.68. As such, it's possible these put buyers are shareholders hedging ahead of earnings.
  
  
• HON hasn't been nearly as impressive on the charts, down almost 2% in 2015 to trade at $98. Amid these struggles, traders have been upping the bearish ante at the ISE, CBOE, and PHLX. The stock's 10-day put/call volume ratio of 1.52 sits just 15 percentage points from a 12-month high. With respect to tomorrow's turn in the confessional, HON has averaged a 2.1% move in the wake of its last eight reports. This time around, the stock's near-term ATM straddle is pricing in a slightly larger swing of 2.7%.


• Finally, short-term calls have been very popular on STI. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.56 indicates call open interest nearly doubles put open interest among options with a shelf-life of three months or less. What's more, this SOIR registers in the low 25th percentile of its annual range. Meanwhile, the stock's near-term ATM straddle is pricing in a 2.4% move in the session adjacent to the company's earnings report -- roughly in line with its typical swing of 2.1% over the past eight quarters. Technically speaking, STI has fallen off sharply since hitting a nearly seven-year high of $45.84 in mid-July, last seen at $39.25.

The healthcare sector is red-hot today amid a broad-market rally. Among the top performers are drugmakers Vital Therapies Inc (NASDAQ:VTL) and Affimed NV (NASDAQ:AFMD). Here's a quick look at how these stocks are performing this afternoon, and how traders have been positioning themselves.

VTL was last seen 13% higher at $6.49 -- in what has been a banner week for the shares -- though its catalyst remains unclear. From a longer-term perspective, the equity has struggled -- losing nearly three-quarters of its value on a year-to-date basis.

Not surprisingly, traders have been scooping up bearish bets over bullish at a breakneck pace of late. VTL's 10-day put/call volume ratio across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 5.41 -- up from 0.91 five sessions ago -- with more than five puts bought to open for every call. Digging deeper, the December 5.50 put has been the most popular strike over that time span, with open interest adding close to 1,500 contracts -- most of which were purchased.

It's more of the same this afternoon. Vital Therapies Inc puts are changing hands at 19times the expected intraday rate. And, despite the stock's intraday gains, traders are buying to open the December 4.50 put in hopes of a sharp reversal below the $4.50 level within the next two months.

Even more impressive, AFMD has spiked over 26% to hover near $7.72 -- bringing it into positive year-to-date territory. In this case, though, the driver is clear -- the firm last night revealed that an existing shareholder recently agreed to buy 3.3 million shares, resulting in a nearly $22 million investment. Based on what's happening on the charts, it's safe to say this development is overshadowing a price-target cut to $7 at Jefferies.

Another safe assumption: Short sellers are feeling the heat. During the latest reporting period, short interest on Affimed NV swelled 11%, and now accounts for 11% of its total float. At the stock's typical trading levels, it would take over one week to buy back these short positions. In other words, there's plenty of sideline cash available to fuel AFMD's fire.

Analysts are weighing in on social media powerhouse Facebook Inc (NASDAQ:FB), integrated circuit specialist Xilinx, Inc. (NASDAQ:XLNX), and athletic apparel firm Nike Inc (NYSE:NKE). Here's a quick roundup of today's bullish brokerage notes on FB, XLNX, and NKE.

• FB is 1.1% higher in pre-market trading, thanks to an upgrade to "buy" at Argus, and a price-target hike to $127 from $106 at Pivotal Research. The shares settled at $94.07 on Wednesday, with the $94-$95 region capping their upside once again, as it has in recent months. During this grind, bears have emerged. Short interest on Facebook Inc increased by over 37% during the two most recent reporting periods. If shorts continue to pile on, the equity could break down on the charts. 


• XLNX is looking at a 4.7% jump out of the gate, as the Street responds positively to the company's fiscal second-quarter earnings beat, and better-than-expected current-quarter sales forecast. Specifically, no fewer than 11 analysts upped their price targets on the stock. On the charts, the shares have bounced between $37 and $48 throughout 2015, settling last night at $45.38. In the options pits, traders are skeptical. Xilinx, Inc.'s 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 2.95 is only 3 percentage points from an annual high. This means put buying has been much more popular than normal. 


• NKE is still carrying the momentum of its impressive showing in the earnings booth from the end of last month. Today, the shares are set to open 0.7% higher after FBR, UBS, Canaccord Genuity, D.A. Davidson, and Cowen and Company all raised their price targets on the stock, with the latter two firms setting the bar the highest at $145. This marks a 15% premium to Wednesday's settlement at $125.84, and territory never before charted. No matter, as hitting new highs has been no problem for Nike Inc, which reached a record peak of $127.10 earlier this week. That's probably why 78% of analysts rate the equity a "buy" or better. Sparking the bullish attention today was the company's ambitious fiscal 2020 revenue target of $50 billion, announced last night.

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