Options Check-Up: 3D Systems, Sears Holdings, and Under Armour

Analyzing recent option activity on DDD, SHLD, and UA

Dec 19, 2014 at 8:16 AM
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Among the stocks attracting attention from options traders lately are 3-D printer maker 3D Systems Corporation (NYSE:DDD), retailer Sears Holdings Corp (NASDAQ:SHLD), and athletic apparel company 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 DDD, SHLD, and UA.

  • DDD has had an abysmal year, shedding 66% of its value year-to-date to settle at $31.78. However, sentiment in the stock's options pits is bullish. 3D Systems Corporation's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.97 stands higher than 75% of all other similar readings in the past year, showing a healthier-than-usual appetite for long calls over puts. However, short interest accounts for nearly 35% of DDD's float, suggesting some of those call purchases may have been at the hands of short sellers looking for a hedge. Whatever the motive, DDD's Schaeffer's Volatility Scorecard (SVS) of 93 indicates the shares have tended to make outsized moves over the past year, relative to what the options market has priced in -- a boon for option buyers.

  • SHLD has also taken a hit in 2014, losing nearly 10% of its value year-to-date, despite an almost 4% gain yesterday, to rest at $33.29. Even though the iconic retailer is struggling to remain relevant, option buyers have been picking up calls over puts at a faster-than-usual clip. Sears Holdings Corp's 10-day ISE/CBOE/PHLX call/put volume ratio of 7.90 is the highest such reading taken in the past year. Again, though, short interest represents almost 29% of SHLD's total float, signaling potential hedging activity. The stock's short-term options are relatively inexpensive at the moment, as its Schaeffer's Volatility Index (SVI) of 82% ranks in the 24th percentile of its annual range.

  • Shares of UA have skyrocketed this year , adding roughly 65% in the past 52 weeks to perch comfortably at $70.94. Unsurprisingly, sentiment in the options pits is fervently bullish. Under Armour Inc's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.46 is an optimistic peak, implying that calls have never been purchased at a faster rate over puts in the past year. However, there's still plenty of room on the bullish bandwagon, as 12 out of 25 analysts maintain "hold" or worse ratings, leaving the door wide open for potential upgrades to push UA even higher. UA's Schaeffer's Volatility Scorecard (SVS) of 76 indicates the shares have made large swings over the past year, relative to what the options market has priced in.

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