Options Check-Up: Qihoo 360 Technology, Starbucks, and Trina Solar

Analyzing recent option activity on QIHU, SBUX, and TSL

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Published on Nov 21, 2014 at 9:12 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are anti-virus firm Qihoo 360 Technology Co Ltd (NYSE:QIHU), coffee purveyor Starbucks Corporation (NASDAQ:SBUX), and alternative energy concern Trina Solar Limited (ADR) (NYSE:TSL). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on QIHU, SBUX, and TSL.

  • QIHU closed Thursday 0.7% lower at $67.55, bringing its year-to-date loss to 17.7%. What's more, the shares continue to test support at their 100-week moving average, and are on pace to close below this trendline for the third time in the past seven weeks -- before which it had never been breached. Nevertheless, traders at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open more than three QIHU calls for every put during the past 10 weeks. The resultant 50-day ISE/CBOE/PHLX call/put volume ratio of 3.40 ranks just 3 percentage points from an annual acme, suggesting traders are betting bullishly ahead of Qihoo 360 Technology Co Ltd's upcoming turn in the earnings confessional -- after the close next Monday. Meanwhile, short-term options are priced rather affordably right now, in spite of the aforementioned event. QIHU's Schaeffer's Volatility Index (SVI) of 51% ranks in the bottom one-third of all readings taken in the previous year.

  • SBUX landed 0.5% higher yesterday at $78.20, as the shares continue their northward trek atop long-term support from their 80-week moving average. More recently, the java name has been in rally mode, up 10.5% since touching a mid-October low of $70.77. Nevertheless, traders at the ISE, CBOE, and PHLX have been rolling the dice on downside for Starbucks Corporation. The equity's 50-day put/call volume ratio across those three exchanges checks in at 0.74, in the 79th annual percentile. An unwinding of these bearish bets could result in tailwinds for SBUX. Meanwhile, those hoping to use options to gamble on the security's near-term trajectory are in luck. SBUX's SVI of 17% is lower than 78% of comparable readings from the past 12 months, suggesting short-term contracts can be had at a relative bargain.

  • Finally, TSL finished flat yesterday at $10.50, and remains 23.2% lower year-to-date. Looking ahead, the company is scheduled to report earnings before the open next Monday. The stock tends to make wild swings in the aftermath of these quarterly events, shedding 8% in the session following its August release, and gaining nearly 31% in May. Ahead of this report, traders have been wagering on losses for Trina Solar Limited (ADR). The security's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.83 rests above 94% of similar readings from the previous 52 weeks. On a related note, TSL's SVI of 72% sits in the 41st percentile of its annual range, suggesting short-term options are slightly less expensive than usual, from a volatility perspective.

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