Options Radar: Priceline Group Inc, Transocean LTD, and Michael Kors

Reviewing notable options activity on Priceline Group Inc, Transocean LTD, and Michael Kors Holdings Ltd

Nov 4, 2014 at 1:04 PM
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Option traders have taken a shine to online travel issue Priceline Group Inc (NASDAQ:PCLN), oil-and-gas concern Transocean LTD (NYSE:RIG), and upscale apparel provider Michael Kors Holdings Ltd (NYSE:KORS). Here's a look at how speculators have been placing their bets on PCLN, RIG, and KORS.

  • Priceline Group Inc (NASDAQ:PCLN) is wallowing in the red at midday, down 9.3% at $1,087.75, after the firm's fourth-quarter earnings forecast left much to be desired, and Benchmark slashed its price target to $1,400 from $1,550 (but retained its "buy" recommendation). Intraday options volume is running at nearly three times the average pace, and eleventh-hour bears are betting on more downside for PCLN through the end of the week, buying to open the weekly 11/7 1,100-strike put -- the most active contract so far.

  • Transocean LTD (NYSE:RIG) is swooning in step with crude oil futures, down 4.5% at $27.56. In fact, the equity is extending its journey into multi-year-low terrain, touching an intraday nadir of $27.08. Ahead of the company's turn in the earnings spotlight on Thursday afternoon, speculators are scrambling to place short-term bets; the stock's 30-day at-the-money implied volatility (IV) was last seen 16.5% higher at 51.2%. Most popular is the November 26.50 put, where almost all of the contracts have traded near the ask price, IV has popped 6.9 percentage points, and volume outstrips open interest -- collectively pointing to newly bought bearish bets. By purchasing the puts to open, the buyers expect RIG to steepen its slide and breach $26.50 by the close on Friday, Nov. 21, when front-month options expire.

  • Finally, Michael Kors Holdings Ltd (NYSE:KORS) is reeling -- despite reporting stronger-than-expected earnings and being upgraded to "buy" from "hold" (as well as seeing its price target upped to $100 from $80) at Jefferies -- after offering an unimpressive current-quarter outlook and projecting slowing same-store sales. Most recently, the shares were down 7.9% at $71.81. What's more, KORS is now docked on the short-sale restricted (SSR) list, forcing bears to the options pits. Intraday put volume is running at seven times the norm, with fresh positions detected at the weekly 11/14 70-strike put. By purchasing the puts to open, the traders expect KORS to backpedal south of $70 -- which corresponds with the equity's intraday low -- by the close on Friday, Nov. 14, when the options cease trading. Bullish holdouts, on the other hand, are purchasing to open November 70 calls, amid expectations for a post-earnings rebound in the short term.
 

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