Options Radar: The Coca-Cola Company, Alibaba Group, and JDS Uniphase

Reviewing notable options activity on The Coca-Cola Company, Alibaba Group Holding Ltd, and JDS Uniphase Corp

by Andrea Kramer

Published on Oct 21, 2014 at 1:08 PM
Updated on Apr 20, 2015 at 5:32 PM

Option traders have taken a shine to blue chip The Coca-Cola Company (NYSE:KO), Chinese Internet issue Alibaba Group Holding Ltd (NYSE:BABA), and telecom tech concern JDS Uniphase Corp (NASDAQ:JDSU). Here's a look at how speculators have been placing their bets on KO, BABA, and JDSU today.

  • The Coca-Cola Company (NYSE:KO) has surrendered 6% to linger at $40.68, as the company's quarterly earnings fell flat. While today's earnings miss was likely much to the delight of recent option bears, some speculators today are gambling on a short-term rebound for KO. Intraday option volume is running at three times the normal pace, with buy-to-open activity detected at the weekly 10/31 40-strike call -- the most active strike thus far. Slightly longer-term bulls, meanwhile, are purchasing new positions at the weekly 11/7 45-strike call, amid hopes for KO to rebound -- and notch record highs -- by the close on Friday, Nov. 7, when the options expire.

  • Amid a tech-sector rally, Alibaba Group Holding Ltd (NYSE:BABA) has advanced 2.5% to trade at $90.50. The company today confirmed that it will unveil its inaugural public earnings report on Tuesday, Nov. 4, and options traders are scrambling to place their bets. The equity's 30-day at-the-money implied volatility is up 5.7% at 41.1%, and earlier notched an all-time peak, with intraday call volume running at nearly twice the typical pace. What's more, calls are outpacing puts by a roughly 3-to-1 margin, echoing the growing trend seen on the major options exchanges. Digging deeper, it looks like bulls are buying to open the November 90 call, expecting BABA to extend its climb north of the strike in the short term.

  • Finally, JDS Uniphase Corp (NASDAQ:JDSU) is also following the tech sector higher, up 2.5% at $12.29. What's more, the stock scored a bullish brokerage note from UBS, which lifted its price target by $3 to $17 and underscored a "buy" endorsement. Intraday options volume is running at twice the average rate, with buy-to-open activity spotted at the June 11 put. By purchasing the puts to open, the buyers expect JDSU to retreat beneath $11 -- territory not charted since early September -- over the next eight months. Looking ahead, JDSU is set to report fiscal first-quarter earnings after the close next Wednesday. In the wake of its last two trips to the earnings confessional, JDSU dropped 8.5% and 14.2% in the subsequent sessions.

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