Options Check-Up: Hewlett-Packard, Adobe Systems Incorporated, eBay

Analyzing recent option activity on HPQ, ADBE, and EBAY


Published on Dec 9, 2014 at 7:51 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are tech giant Hewlett-Packard Company (NYSE:HPQ), software powerhouse Adobe Systems Incorporated, and online auctioneer eBay Inc (NASDAQ:EBAY). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on HPQ, ADBE, and EBAY.

  • HPQ followed the broader market lower yesterday, dropping 2.4% to close at $38.46. The downward move is an unusual one for the stock, as it has been on a technical tear in 2014, gaining 37.5% year-to-date. Regardless, bearish options traders have been targeting Hewlett-Packard Company recently. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day put/call volume ratio of 1.04 sits only 4 percentage points from an annual high, meaning puts have rarely been bought to open over calls at a faster pace in the last year. Now is an optimal time to pick up HPQ's short-term options, as its Schaeffer's Volatility Index (SVI) of 18% is lower than 95% of similar readings taken in the last year, implying near-term options are extremely inexpensive, from a volatility standpoint.

  • Pessimism is growing ahead of ADBE's fiscal fourth-quarter earnings report -- tentatively scheduled for release this Thursday evening -- with the stock shedding 0.5% yesterday to finish at $72.05. Elsewhere, Adobe Systems Incorporated's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.95 ranks in the bearishly skewed 89th percentile of its annual range. On a volatility basis, the security's short-term options are more expensive than normal, per its SVI of 35%, which lands in its 61st annual percentile.

  • EBAY has been struggling around the breakeven mark for several weeks, closing at $55.15 yesterday, a gain of 0.6%. Traders in the equity's options pits are taking a bearish stance. Specifically, at the ISE, CBOE, and PHLX, eBay Inc's 10-day put/call volume ratio comes in at 0.83 -- in its 87th annual percentile. From a volatility perspective, the stock's near-term options are inexpensive, as its SVI of 18% ranks in the 15th percentile of its annual range.

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