Options Check-Up: Citigroup Inc, Toll Brothers Inc, Under Armour Inc

Analyzing recent option activity on C, TOL, and UA

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Published on Nov 26, 2014 at 7:53 AM
Updated on Jun 24, 2020 at 10:16 AM

Among the stocks attracting attention from options traders lately are financial behemoth Citigroup Inc (NYSE:C), housing concern Toll Brothers Inc (NYSE:TOL) and athletic apparel issue Under Armour Inc (NYSE:UA). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on C, TOL, and UA.

  • It's been a mild year for C on the charts, as yesterday's 0.1% loss brought it to $54.33 -- just 4 percentage points above its year-to-date breakeven level. In the stock's options pits, speculators are mostly of the bearish variety. For example, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Citigroup Inc's 10-day put/call volume ratio of 0.54 ranks in the 74th annual percentile, showing puts have been bought to open over calls at a faster-than-normal rate in the past two weeks. On a volatility basis, C's near-term options are attractively priced, according to its Schaeffer's Volatility Index (SVI) of 13% -- only 4 percentage points from an annual low.

  • Like Citigroup, TOL is hovering near its year-to-date breakeven mark, and yesterday closed 0.6% lower at $34.94. Over the last 50 sessions, option traders have been betting on a move to the upside. Specifically, at the ISE, CBOE, and PHLX, for each Toll Brothers Inc put bought to open, traders have picked up 7.35 calls. What's more, calls have been bought to open at a faster pace only 12% of the time in the past year. The equity's short-term options are on the inexpensive side, with its SVI of 26% landing in the 31st annual percentile.

  • UA has been a strong mover on the charts, adding 74.2% year-over-year, including a gain of 1% yesterday to finish at $70.67. Somewhat surprisingly, several analysts remain uncertain about Under Armour Inc, with 12 out of 24 covering firms handing out "hold" or worse ratings. There appears to be room for analyst upgrades to push the equity even higher, should it continue its uptrend -- which is exactly what many options traders expect. At the ISE, CBOE, and PHLX, UA's 10-day call/put volume ratio of 3.24 ranks in the 90th annual percentile. The security's near-term options are near bottom-dollar, according to its SVI of 26%, in the 9th percentile of its annual range.


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