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Analyzing recent option activity for GRPN, FSLR, and YHOO
Among the stocks attracting attention from options traders lately are mass-discount provider Groupon Inc (NASDAQ:GRPN), alternative energy concern First Solar, Inc. (NASDAQ:FSLR), and Internet issue Yahoo! Inc. (NASDAQ:YHOO). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on GRPN, FSLR, and YHOO.
- GRPN added 1.2% to land at $6.00 on Tuesday, but remains 49% lower year-to-date. In fact, the shares have surrendered more than 10% in October, led lower beneath their 10-day and 20-day moving averages. However, ahead of Groupon Inc's turn in the earnings confessional Thursday night, option buyers have picked up calls over puts at an accelerated clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 6.19 stands higher than 77% of all other readings from the past year. However, considering short interest accounts for 22% of GRPN's total available float, it's possible that some of the recent call buying could be attributable to short sellers looking for a short-term options hedge. Whatever the motive, now isn't the best time to pick up GRPN's short-term contracts; the stock's Schaeffer's Volatility Scorecard (SVS) sits at a relatively low 34, suggesting the equity's options have tended to be overpriced during the last year, relative to GRPN's technical movement.
- FSLR soared 5.7% to $57.38 on Tuesday, bringing its year-to-date gain to 5%. What's more, the shares ended north of their 20-day moving average for the first time since mid-September. First Solar, Inc. is scheduled to report third-quarter earnings after the close next Thursday, Nov. 6, and option buyers are gambling on a dip. The equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.91 sits just 3 percentage points from an annual peak, pointing to a healthier-than-usual appetite for FSLR puts over calls of late. The security's SVS of 77 indicates that FSLR has tended to make outsized moves on the charts during the past 52 weeks, relative to what the options market has priced in.
- Finally, YHOO jumped 2.6% to finish at $45.85, and followed Alibaba Group Holding Ltd (NYSE:BABA) into new-high territory, peaking at a decade-plus high of $46.15. The shares of Yahoo! Inc. have tacked on 12.5% in October, yet put buying has accelerated on the major exchanges. Specifically, YHOO sports a 10-day ISE/CBOE/PHLX put/call volume ratio of 0.48 -- in the 94th percentile of its annual range. Of course, considering YHOO's ascent -- the stock's 14-day Relative Strength Index (RSI) of 72 sits in overbought territory, suggesting a short-term breather could be in the cards -- some of those puts may have been bought by shareholders looking for options insurance. In any event, now is an opportune time to gamble with YHOO's short-term contracts. The equity's Schaeffer's Volatility Index (SVI) of 34% stands higher than just 29% of all other readings from the past year, suggesting near-term options are attractively priced right now, from a historical standpoint.