Options Check-Up: BlackBerry Ltd, Coach Inc, and Facebook Inc (FB)

Analyzing recent option activity for BBRY, COH, and FB

by Alex Eppstein

Published on Oct 24, 2014 at 8:12 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are handset maker BlackBerry Ltd (NASDAQ:BBRY), accessories designer Coach Inc (NYSE:COH), and social network Facebook Inc (NASDAQ:FB). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on BBRY, COH, and FB.

  • BBRY ended yesterday's session 4.3% higher at $10.31, bringing its year-to-date advance to nearly 39%. In recent sessions, the shares have found a reliable foothold at the round-number $10 level. Not surprisingly, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open calls over puts at a rapid-fire rate in recent weeks. BlackBerry Ltd's 10-day call/put volume ratio of 6.27 across those exchanges ranks in the 89th percentile of its annual range. What's more, based on the stock's Schaeffer's Volatility Scorecard (SVS) of 100, BBRY has tended to make outsized moves over the past year, relative to what the options market has priced in.

  • COH tacked on 2% to close at $35.94 on Thursday, but remains roughly 36% lower since the start of 2014. During the past 10 weeks at the ISE, CBOE, and PHLX, the equity has racked up a call/put volume ratio of 2.73 -- just 2 percentage points from an annual acme. However, some of these long calls may have been initiated by short sellers hedging their bearish bets ahead of next Tuesday morning's earnings report. After all, nearly one-tenth of Coach Inc's float is sold short, which would take about eight days to buy back, at the security's average daily trading levels. Looking back a year, COH has been more volatile than the options markets has expected, based on the stock's SVS of 85.

  • Finally, FB touched a record high of $80.63 yesterday, and ended 2.1% higher at $80.04. Nevertheless, options traders have been targeting long puts, relative to calls, at an annual-extreme clip recently. Specifically, Facebook Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.77 is higher than all other readings from the previous year -- though some of this activity may have been at the hands of shareholders looking to hedge their long stock positions ahead of the company's third-quarter earnings report, slated for release after next Tuesday's close. Regardless, now is an opportune time to wager on FB with short-term options, as the equity's Schaeffer's Volatility Index (SVI) of 43% rests below 65% of comparable readings recorded during the last 52 weeks.

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