Options Check-Up: Nike Inc, QUALCOMM, Inc., and Nokia Corporation

Analyzing recent option activity on NKE, QCOM, and NOK

Dec 18, 2014 at 7:58 AM
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Among the stocks attracting attention from options traders lately are athletic apparel giant Nike Inc (NYSE:NKE), networking specialist QUALCOMM, Inc. (NASDAQ:QCOM), and mobile phone maker Nokia Corporation (ADR) (NYSE:NOK). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on NKE, QCOM, and NOK.

  • NKE has performed well in 2014, gaining roughly 20% year-to-date to perch comfortably at $94.50. Surprisingly, sentiment in the options pits is slightly more bearish than usual. Nike Inc's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.51 ranks higher than 57% of all other readings in the past year. However, NKE's 30-day at-the-money implied volatility hit a new high yesterday at 28.8% before settling at 27.8%, showing high demand -- and, thus, elevated prices -- for short-term options ahead of tonight's earnings report.

  • QCOM has tumbled 12.4% since peaking near $82 in mid-July, and despite yesterday's 2.7% gain, the stock has shed 2.7% of its value year-to-date to sit at $72.21. Accordingly, sentiment among options traders is growing increasingly bearish, as the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.87 ranks higher than 90% of readings in the past year. The equity's short-term options are currently more expensive than usual, as its Schaeffer's Volatility Index (SVI) of 25% ranks in the 73rd percentile of its yearly range. Meanwhile, analysts covering QUALCOMM, Inc. are overwhelmingly bullish, with 18 out of 23 giving the equity a "buy" or better rating, with not a single "sell" in sight. If the stock continues to fall, it may see a round of analyst downgrades, which could push the shares even lower.

  • Shares of NOK have underperformed lately, losing 3.1% year-to-date, despite gaining 1.7% yesterday to rest at $7.86. Correspondingly, traders in the options pits are slowly shifting from bullish to bearish on the stock. Nokia Corporation's (ADR) 50-day ISE/CBOE/PHLX put/call volume ratio of 0.29 is in the 75th percentile of its annual range, meaning puts have been bought to open over calls at a faster pace only 25% of the time in the last year. Per the equity's SVI of 38% -- which is in the 43rd annual percentile -- short-term options prices are relatively muted. However, the stock's Schaeffer's Volatility Scorecard (SVS) of 22 indicates the shares have tended to make undersized moves over the past year, relative to what the options market has priced in.

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