Options Check-Up: Cree, Inc., Boeing Co and AT&T Inc.

Analyzing recent option activity on CREE, BA, and T


Published on Nov 25, 2014 at 7:49 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are LED stock Cree, Inc. (NASDAQ:CREE), aerospace titan Boeing Co (NYSE:BA) and telecom issue AT&T Inc. (NYSE:T). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on CREE, BA, and T.

  • Since gapping down nearly 18% following last month's fiscal first-quarter earnings miss, CREE has gained back 34% to close at $36.56 yesterday. Even with the stock's recent rebound, sentiment in the options pits appears bearish. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Cree, Inc.'s 50-day put/call volume ratio of 0.62 ranks in the 78th percentile of its annual range, showing puts have been bought to open over calls at a faster-than-normal pace. Right now, traders aren't spending much on their bets, as the equity's Schaeffer's Volatility Index (SVI) of 34% ranks in the 22nd percentile of its annual range, showing short-term options are relatively inexpensive, on a volatility basis.

  • Option bears have been rushing toward BA recently, as its 10-day ISE/CBOE/PHLX put/call volume ratio of 0.91 stands only 3 percentage points from an annual pessimistic extreme. Boeing Co's near-term options can be had at bargain price, according to its SVI of 15% -- in the 17th percentile of all similar readings taken in the past year. On the technical front, BA added 1.4% yesterday to finish at $134.61, amid news that final assembly has begun on its 787-9 Dreamliner. However, the stock remains 1.4% lower year-to-date.

  • T dropped below its year-to-date breakeven mark yesterday, finishing 1.6% lower at $34.70. Nevertheless, option traders remain mostly upbeat toward the equity, per its 10-day ISE/CBOE/PHLX call/put volume ratio of 1.52, a number that ranks in the bullishly skewed 67th annual percentile -- though some of this call buying may have been at the hands of short sellers seeking a hedge, as short interest spiked 14% during the two most recent reporting periods. AT&T Inc.'s short-term options are also inexpensive on a volatility basis, as its SVI of 12% ranks in the 17th percentile of its annual range.

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