Options Check-Up: Hewlett-Packard, 3D Systems, Keurig Green Mountain

Analyzing recent option activity for HPQ, DDD, and GMCR

by Andrea Kramer

Published on Oct 30, 2014 at 7:43 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are tech titan Hewlett-Packard Company (NYSE:HPQ), 3-D printer maker 3D Systems Corporation (NYSE:DDD), and coffee concern Keurig Green Mountain Inc (NASDAQ:GMCR). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on HPQ, DDD, and GMCR.

  • HPQ finished 0.5% lower at $35.38 on Wednesday, despite announcing its foray into the 3-D printing arena. From a longer-term perspective, the equity has underperformed the broader S&P 500 Index (SPX) during the past two months, yet option buyers have grown increasingly bullish. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day call/put volume ratio of 4.66 stands just 1 percentage point from an annual high, pointing to a healthier-than-usual appetite for HPQ calls over puts during the past two weeks. The security's Schaeffer's Volatility Scorecard (SVS) sits at 60, implying that Hewlett-Packard Company has tended to make in-line moves over the past year, relative to what the options market has priced in.

  • HPQ's announcement made more of an impact on DDD, which settled 4.7% lower at $37.10, after touching a new annual low of $36.12. The security is now down 60% year-to-date, yet the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 1.68 stands higher than three-quarters of all other readings from the past year. However, some of the recent call buyers could be short sellers looking to hedge against any unexpected upside. Short interest accounts for nearly one-third of 3D Systems Corporation's total available float, representing more than two weeks' worth of pent-up buying demand, at the equity's average pace of trading. Whatever the motive, DDD's short-term options are attractively priced right now. The equity's SVS rests at a lofty 99, suggesting the shares have tended to make outsized moves on the charts, relative to option premiums.

  • Finally, GMCR edged 0.8% higher to $147.87, bringing its year-to-date gain to an impressive 95.8%. Although Keurig Green Mountain Inc has outperformed the SPX by more than 20 percentage points during the past three months, and just touched a record high of $148.11 on Tuesday, the bullish bandwagon is far from crowded. Not even half of the analysts following GMCR deem it worthy of a "buy," and the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.94 ranks in the 73rd percentile of its annual range. In simpler terms, option buyers have picked up puts over calls at a faster-than-usual pace during the past couple of weeks, and short-term traders could be placing well-timed bets, as the stock's SVS is perched at 95. However, should GMCR extend its quest for new highs, a round of upgrades and/or a mass exodus of option bears could translate into additional tailwinds.

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