Forex Issues Spark Option Action on Interactive Brokers Group, Inc. and GAIN Capital Holdings, Inc.

Interactive Brokers Group, Inc. (IBKR) and Gain Capital Holdings Inc (GCAP) options are hot

Jan 16, 2015 at 12:32 PM
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Forex concerns Interactive Brokers Group, Inc. (NASDAQ:IBKR) and Gain Capital Holdings Inc (NYSE:GCAP) have taken different paths in the wake of the Swiss National Bank's surprise move. While IBKR is following in the footsteps of beleaguered sector peer FXCM Inc (NYSE:FXCM), GCAP is taking the (higher) road less traveled. Against this backdrop, both equities are garnering attention in the options pits.

After falling as low as $25.56, IBKR has pared its deficit to 3.5% to trade at $27.29, after stating the Swiss franc move has resulted in debits of about $120 million -- not even 2.5% of the company's net worth. Option players are gambling on more downside for the equity, with puts trading at 82 times the average intraday pace. Digging deeper, it looks like bears are buying to open the June 25 put, which will move into the money if IBKR breaches $25 by June options expiration.

Daily Chart of IBKR since October 2014

Today's affinity for long puts stands in stark contrast to the recent trend on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), where traders have bought to open 84 calls for every put on Interactive Brokers Group, Inc. (NASDAQ:IBKR). Traders are likely gambling on a post-earnings jump for IBKR, which reports after the close next Tuesday. The stock surged 2.4% in the session after its October earnings report.

GCAP is up 2.3% at $8.47, after the firm actually said it generated a profit from the Swiss franc's rally. However, the stock initially fell to $7.75 -- and landed on the short-sale restricted list -- sending bears to the options pits.

GCAP puts are trading at 86 times the average intraday rate, with skeptics buying to open the February 7 put. The options will move into the money if GCAP sinks beneath $7 by the close on Friday, Feb. 20, when the soon-to-be front-month options expire.

This appetite for bearish bets is just more of the same for Gain Capital Holdings Inc (NYSE:GCAP). During the past two weeks, traders have bought to open nearly 11 puts for every call on the ISE, CBOE, and PHLX.


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