Options Check-Up: CVS Health Corp, First Solar, Inc., and Starbucks Corporation

Analyzing recent option activity for CVS, FSLR, and SBUX

by Alex Eppstein

Published on Oct 23, 2014 at 8:40 AM
Updated on Apr 20, 2015 at 5:10 PM

Among the stocks attracting attention from options traders lately are pharmacy chain CVS Health Corp (NYSE:CVS), alternative energy expert First Solar, Inc. (NASDAQ:FSLR), and coffee king Starbucks Corporation (NASDAQ:SBUX). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on CVS, FSLR, and SBUX.

  • CVS hit a record high of $83.79 yesterday, before settling with a 0.4% gain at $83.25. Longer term, the shares have tacked on a healthy 16.3% year-to-date. Therefore, it comes as no surprise that options traders have bought to open nearly three times as many calls as puts over the past two weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resultant 10-day call/put volume ratio of 2.66 ranks in the bullishly skewed 78th percentile of its annual range. What's more, those looking to buy CVS Health Corp options have an encouraging track record on their side, as the stock's Schaeffer's Volatility Scorecard (SVS) checks in at 75. In other words, over the last 52 weeks, the shares have tended to make bigger moves than what their options have priced in.

  • FSLR fell 2.8% yesterday to close at $54.75, placing the shares just above their year-to-date flat line. In options land, traders have bought to open puts (relative to calls) at an accelerated rate recently, per the stock's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.56 -- which sits just 10 percentage points from a 12-month peak. What's more, based on the security's SVS of 79, shares of First Solar, Inc. have tended to make outsized moves, relative to what the options market has been expecting. Looking ahead, FSLR is scheduled to report third-quarter earnings between Wednesday, Oct. 29, and Monday, Nov. 3.

  • Finally, SBUX, which will report fiscal fourth-quarter numbers after next Thursday's closing bell, ended Wednesday 0.3% higher at $74.60. Nevertheless, the stock is sitting on a year-to-date deficit of 4.8%. At the ISE, CBOE, and PHLX, traders have been buying to open puts over calls at an extreme rate during the past two weeks, based on Starbucks Corporation's 10-day put/call volume ratio of 2.74 -- which bests all other readings from the last year. Meanwhile, the cost of short-term SBUX options is middle-of-the-road, per the equity's Schaeffer's Volatility Index (SVI) of 23%, which rests in the 50th annual percentile.

A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earning announcements before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.
Apparel Name Boosted By Earnings Beat
Three analysts have moved their price targets down to $60
Black & Decker Withdraws 2020 Guidance, Cuts Non-Essential Staff
Black & Decker said it would reduce any non-essential staff and decided to withdraw its 2020 forecast
Look Who's Going Bankrupt Next in America
Porter Stansberry is making a concerning prediction.