Options Radar: Intercept, Alibaba Group Holding, Whole Foods Market

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

by Karee Venema

Published on Nov 7, 2014 at 2:08 PM
Updated on Apr 20, 2015 at 5:32 PM

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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