Options Check-Up: Applied Materials, Wal-Mart Stores, Canadian Solar

Analyzing recent option activity for AMAT, WMT, and CSIQ

by Karee Venema

Published on Nov 11, 2014 at 7:35 AM
Updated on Jun 24, 2020 at 10:16 AM

Among the stocks attracting attention from options traders lately are semiconductor concern Applied Materials, Inc. (NASDAQ:AMAT), retail giant Wal-Mart Stores, Inc. (NYSE:WMT), and alternative energy issue Canadian Solar Inc. (NASDAQ:CSIQ). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMAT, WMT, and CSIQ.

  • AMAT tacked on 0.9% on Monday -- extending its year-to-date advance to 28% -- to close the session at $22.63. In the equity's options pits, traders have shown a distinct preference for bullish bets over bearish of late. In fact, at 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 36.11 ranks in the 90th percentile of its annual range. Simply stated, calls have been bought to open over puts with more rapidity just 10% of the time within the past year. Meanwhile, with Applied Materials, Inc. preparing to step into the earnings confessional after Thursday's close, premium on the stock's front-month options is relatively expensive at the moment, as evidenced by AMAT's Schaeffer's Volatility Index (SVI) of 49%, which ranks in the 83rd percentile of its annual range.

  • WMT will take its place on the earnings stage ahead of Thursday's open -- an event that will unofficially mark the end of third-quarter earnings season. Over the past four quarters, the stock has averaged a single-session post-earnings loss of 1.2%, but option traders are betting on the equity to buck this historically bearish trend. At the ISE, CBOE, and PHLX, for example, the security's 10-day call/put volume ratio of 18.15 ranks just 2 percentage points from an annual bullish peak. The security's front-month options are currently pricing in relatively tame volatility expectations, per WMT's SVI of 16%, which ranks in the middling 58th percentile of its annual range. On Monday, Wal-Mart Stores, Inc. settled up 0.9% at $79.44, and now sits 1% higher on the year.

  • Amid a sector-wide rally -- and news of a freshly inked deal with Independent Electricity System Operator -- CSIQ jumped 4.8% yesterday to close at $31.72. Ahead of the company's early morning earnings report on Wednesday, option traders have been growing increasingly optimistic, which shouldn't be too surprising considering CSIQ surged more than 24% in the session after unveiling its results in August. Over the past 10 sessions, specifically, speculators at the ISE, CBOE, and PHLX have bought to open 5.79 calls for every put. What's more, this ratio ranks higher than 88% of similar readings taken in the past 12 months. With uncertainty surrounding the scheduled event looming, those purchasing Canadian Solar Inc.'s front-month options are willing to pay a pretty penny: the stock's SVI of 83% ranks in the 66th percentile of its annual range.

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