Options Check-Up: Bank of America Corp, Mobileye NV, and NVIDIA

Analyzing recent option activity on BAC, MBLY, and NVDA

by Karee Venema

Published on Nov 13, 2014 at 7:28 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are financial firm Bank of America Corp (NYSE:BAC), software specialist Mobileye NV (NYSE:MBLY), and chipmaker NVIDIA Corporation (NASDAQ:NVDA). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on BAC, MBLY, and NVDA.

  • BAC closed 0.2% lower yesterday at $17.29, following news of a massive forex-related fine levied toward a number of large global lenders. Longer term, though, the shares have rallied roughly 20% since taking a sharp bounce off their 320-day moving average in mid-May. This uptrend has failed to convince options traders, per the stock's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.46, which ranks in the 98th percentile of its annual range. In other words, puts have been bought to open over calls with more rapidity just 2% of the time within in the past year. Regardless, now is an opportune time to purchase premium on the equity's front-month options at a relative bargain, considering Bank of America Corp's Schaeffer's Volatility Index (SVI) of 18% ranks lower than 84% of similar readings taken in the past year.

  • MBLY tacked on 1.7% on Wednesday to settle the session at $48.22, and is now up 34% since going public in early August. Although the equity shed 3.4% following its inaugural turn in the earnings confessional in September, option traders have been betting on the stock's longer-term uptrend to remain intact when Mobileye NV unveils its third-quarter results next Thursday morning. Over the past 10 sessions, specifically, speculators have bought to open 3.59 calls for every put on MBLY. Meanwhile, with uncertainty surrounding the upcoming event, volatility expectations are on the rise. In fact, the stock's SVI of 78% ranks in the lofty 81st percentile of its range.

  • NVDA surrendered 0.7% yesterday to close at $19.64, after Samsung upped the ante on its patent-infringement lawsuit. Year-to-date, however, the shares are still enjoying a respectable 23% lead -- and just last week, tagged a fresh three-year high of $20.69 following NVIDIA Corporation's successful turn on the earnings stage. Options traders, though, have shown a stronger-than-usual preference for long puts over calls of late, per NVDA's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.62, which ranks higher than 80% of comparable readings taken over the past 12 months. Currently, the options market is pricing in relatively tame volatility expectations, as NVDA's SVI of 34% ranks in the 40th annual percentile.

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