Options Radar: Intercept, Alibaba, Whole Foods Market

Reviewing notable options activity on Intercept Pharmaceuticals Inc, Alibaba Group Holding Ltd, and Whole Foods Market, Inc.

Nov 7, 2014 at 2:08 PM
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Three stocks seeing notable options activity today are drugmaker Intercept Pharmaceuticals Inc (NASDAQ:ICPT), Chinese e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA), and organic grocer Whole Foods Market, Inc. (NASDAQ:WFM). Here's a closer look at how speculators have been placing their bets on ICPT, BABA, and WFM.

  • Intercept Pharmaceuticals Inc (NASDAQ:ICPT) has plunged 26.8% to $181.05 -- making it one of the biggest losers on the Nasdaq, second only to Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP). Prompting today's bearish gap is news the company's experimental liver drug needs more safety studies, as well as a downgrade to "market perform" from "outperform" and price-target cut to $191 from $445 at Leerink Swann. With ICPT being stuck on the short-sale restricted list, put volume has soared to 16 times the intraday average, as traders look for alternate ways to bet bearishly on the stock. Drilling down, eleventh-hour bears are buying to open the equity's weekly 11/7 165- and 170-strike puts to wager on additional downside through tonight's close.

  • Having a decidedly different day is Alibaba Group Holding Ltd (NYSE:BABA), which tagged a new record high of $114.77 earlier, before easing back to its current perch at $113.89. Today's momentum is just more of the same for a stock that's rallied roughly 23% since going public on Sept. 19, and option traders continue to gamble on more upside for the shares. Taking a quick step back, calls are crossing the tape at four times what's typically seen at this point in the day, and the equity's 30-day at-the-money (ATM) implied volatility (IV) is up 14.2% to 40.8%, signaling elevated demand for short-term options. BABA's two most active options are the weekly 11/7 113- and 114-strike calls, where buy-to-open activity has been detected. Meanwhile, those rolling the dice on another all-time peak are initiating fresh long positions at the equity's weekly 11/14 115-strike call. On the fundamental front, BABA will host its sixth-annual shopping day -- better known as "Singles Day" -- next Tuesday, Nov. 11.

  • Whole Foods Market, Inc. (NASDAQ:WFM) is extending its post-earnings momentum, up 4.3% at last check to trade at $46.79. On a weekly basis, the shares are on pace to log a 19% gain. In the options pits, calls are trading at eight times the expected intraday rate, and are outpacing their put counterparts by a nearly 3-to-1 margin. Meanwhile, the stock's 30-day ATM IV has jumped 15.4% to 25.5%, meaning short-term contracts are in high demand. Most active is WFM's November 40 call, where it appears traders are selling to close their positions ahead of front-month expiration. Elsewhere, buy-to-open activity is possibly occurring at the security's weekly 11/7 46.50-strike call, as last-minute traders gamble on additional upside through tonight's close, when the series expires.

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