Google Buyout Rumors Spark Volatile Trading for Snap

Amazon has launched a private-label oil line

Sep 14, 2018 at 2:34 PM
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The U.S. stock market has erased its earlier gains on reports President Donald Trump is pushing for a fresh round of tariffs on China. Among individual names making volatile moves are Snapchat parent Snap Inc (NYSE:SNAP), instant oil change expert Valvoline Inc (NYSE:VVV), and utility company NiSource Inc. (NYSE:NI). Here's a quick look at what's moving shares of SNAP, VVV, and NI.

Snap Stock Heads Toward 10th Straight Weekly Loss

Snap stock was up 5.2% earlier on rumors of a possible Google bid for the social media firm. The shares have since swung 0.4% lower to trade at $9.32, extending a negative week for Snap. In fact, the security hit a record low of $8.90 on Wednesday, Sept. 12, after a scathing analyst note, and is now on comfortably on track for its 10th straight weekly loss.

It's a wild session in Snap's options pits, as well, with roughly 101,000 calls and 61,000 puts on the tape -- nearly three times what's usually seen at this point in the day. The September 10.50 call is most active by a mile, and it looks like new positions are being purchased here for a volume-weighted average (VWAP) price of $0.11. If this is the case, breakeven for the call buyers at next Friday's close is $10.61 (strike plus premium paid).

Valvoline is Amazon's Latest Victim

The shares of Valvoline are trading down 9% at $20.32 -- on track for their worst day ever -- on news Amazon has thrown its hat into the oil business, launching Amazon Basics Synthetic Motor Oil. Pouring salt on the proverbial wound is a downgrade to "underweight" from "neutral" at J.P. Morgan Securities, which also lowered its price target to $20 from $22.

While today's drop has VVV stock on track to snap its four-day win streak, it's been a long-term laggard. Year-to-date, the security is down 18.8%, with its formerly supportive 180-day moving average capping recent rally attempts.

Speculators are piling into Valvoline's typically quiet options arena, too, with a distinct skew toward puts. By the numbers, 1,667 puts and 337 calls have changed hands, compared to an average daily volume of 75. Traders may be buying to open the October 20 puts for a VWAP of $0.22, making at-expiration breakeven $19.78 (strike less VWAP).

NiSource Stock Leveled on Boston Gas Explosion News     

NiSource stock has plunged 11.4% to trade at $24.88 -- pacing for its biggest one-day loss since Nov. 2, 2001 -- after investigators said a subsidiary of the utility company was responsible for several gas explosions in the Boston area that left one person dead and a dozen injured. NI stock has now erased its year-to-date lead, and could close below its 20-day moving average for the first time since Aug. 1.

Put players are blasting the sinking stock, with nearly 7,800 contracts traded so far -- almost 325 times the average daily volume, and a new annual high. Traders may be purchasing new positions at the October 24 and September 25 puts, NI's two most active options, betting on more downside for the utility shares over the next five weeks.


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