Options Radar: Yahoo! Inc., T-Mobile US Inc, and Lululemon Athletica

Reviewing notable options activity on Yahoo! Inc., T-Mobile US Inc, and Lululemon Athletica inc.

Nov 20, 2014 at 12:56 PM
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Option traders have taken a shine to Internet titan Yahoo! Inc. (NASDAQ:YHOO), wireless provider T-Mobile US Inc (NYSE:TMUS), and yoga apparel maker Lululemon Athletica inc. (NASDAQ:LULU). Here's a look at how speculators have been placing their bets on YHOO, TMUS, and LULU.

  • Yahoo! Inc. (NASDAQ:YHOO) is 2.7% higher at $51.96 -- not far from another 14-year high -- on news the company ousted Google Inc (NASDAQ:GOOGL) as the default search engine for Mozilla's Firefox, breaking up a 10-year partnership. CEO Marissa Mayer said the five-year deal -- which kicks off next month -- should help YHOO gain search market share. In addition, YHOO may be getting an added lift from Alibaba Group Holding Ltd (NYSE:BABA) -- of which YHOO owns a stake -- on solid demand for the Chinese e-commerce concern's inaugural bond sale. Against this backdrop, YHOO calls are trading at a 50% mark-up to the average intraday pace, and the stock's 30-day at-the-money (ATM) implied volatility (IV) has jumped 4.2%, reflecting an affinity for short-term contracts. Digging deeper, it looks like traders are buying to open the November 52 and 53 calls, hoping YHOO extends today's rally north of these strikes by tomorrow's close, when front-month options expire.

  • T-Mobile US Inc (NYSE:TMUS) is 1.6% higher at $27.89, after Deutsche Telekom -- TMUS' majority owner -- CEO Timotheus Hoettges waxed optimistic on the prospects of attracting another suitor. In mid-October, TMUS tumbled into annual-low territory south of $25, after France's Iliad jilted the U.S. carrier. In options land, TMUS calls are trading at nine times the typical intraday rate, and have outnumbered puts by a margin of more than 23-to-1. Most of the action transpired at the out-of-the-money February 30 call, where two blocks totaling 4,350 contracts traded around the same time this morning. Both crossed on the ask side, and volume exceeds open interest at the strike, hinting at newly bought bullish bets. By purchasing the calls to open, the buyers expect TMUS to climb north of $30 -- in territory not charted since mid-September -- by the close on Friday, Feb. 20, when the options expire.

  • Finally, Lululemon Athletica inc. (NASDAQ:LULU) is up 2.6% to $46.78 on no apparent news. The equity has tacked on nearly 4% so far this week, and is on pace for its loftiest settlement since late April. In the options arena, it looks like some bulls are taking profits in the wake of LULU's run higher. Intraday call volume is running at twice the average rate, with potential sell-to-close action detected at the in-the-money December 42.50 call -- the most active contract thus far. Plenty more bulls could liquidate their winning positions, too; the security's 10-day call/put volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 3.67 -- just 8 percentage points from an annual peak.

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