Options Check-Up: GameStop Corp., QUALCOMM, Inc., and Tesla Motors Inc

Analyzing recent option activity on GME, QCOM, and TSLA

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Published on Nov 19, 2014 at 7:55 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are video game retailer GameStop Corp. (NYSE:GME), communications giant QUALCOMM, Inc. (NASDAQ:QCOM), and electric automaker Tesla Motors Inc (NASDAQ:TSLA). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on GME, QCOM, and TSLA.

  • GME moved little yesterday, giving back just 8 cents to close at $44.02. In recent weeks, the shares have made a strong move up the charts, jumping 23% since their mid-October low of $35.82. Nevertheless, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than two puts for every call on GameStop Corp. during the past two weeks. The resultant 10-day put/call volume ratio of 2.28 registers in the 78th percentile of its annual range, suggesting a healthier-than-usual appetite for bearish bets over bullish. Meanwhile, short-term GME options can be had for a slightly below-average price right now, as the stock's Schaeffer's Volatility Index (SVI) of 58% sits below three-fifths of all readings taken in the last 12 months. This, despite the fact the company's third-quarter earnings report is just around the corner, after the close tomorrow.

  • QCOM added 2.3% yesterday to land at $72.01, and today, the firm will host its annual analyst meeting. It's been an uneventful year for the shares, which are down 3% since the beginning of 2014. More recently, QUALCOMM, Inc. has underperformed the broader S&P 500 Index (SPX) by about 10 percentage points over the previous three months. Nonetheless, the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.89 stands just 4 percentage points from an annual high -- suggesting traders are more optimistic than usual toward the shares. However, those hoping to place short-term bets on QCOM should be careful, as the equity's Schaeffer's Volatility Scorecard (SVS) checks in at 16. In other words, the options market has tended to price in more volatility over the past 12 months than QCOM has deserved, based on its actual moves on the charts.

  • Finally, TSLA tacked on 1.5% Tuesday to finish at $257.70, and is now up 71.3% on a year-to-date basis. Nevertheless, recent options speculators have been buying to open puts over calls at a faster-than-usual pace, per Tesla Motors Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.91 -- which ranks in the 72nd percentile of its 12-month range. (Though some of these bearish bets may have been initiated by shareholders hedging against potential downside in the stock.) Regardless of their motives, traders can pick up short-term TSLA options at a relative bargain right now. The stock's SVI of 34% is lower than 92% of all readings from the previous 52 weeks.

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