Options Check-Up: Check Point Software, FireEye, Inc., LifeLock, Inc.

Analyzing recent option activity on CHKP, FEYE, and LOCK

by Griffin Kruse

Published on Dec 31, 2014 at 8:10 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are cybersecurity specialists Check Point Software Technologies Ltd. (NASDAQ:CHKP), FireEye, Inc. (NASDAQ:FEYE), and LifeLock, Inc. (NYSE:LOCK). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on CHKP, FEYE, and LOCK.

  • CHKP has had a great year, adding 22.7% year-to-date to perch at $79.11, and notching a fresh 13-year high of $80.82 on Dec. 24 -- possibly helped by media buzz over recent hacking scandals involving both Sony Corp (ADR) (NYSE:SNE) and Microsoft Corporation (NASDAQ:MSFT). Accordingly, sentiment in the stock's options pits is skewed bullishly. Check Point Software Technologies Ltd.'s 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 28.19 stands just 7 percentage points away from an annual peak. Meanwhile, short-term options for the stock are currently inexpensive, as its Schaeffer's Volatility Index (SVI) of 18% ranks in the 23rd percentile of all similar readings from the past year.

  • Shares of FEYE haven't been so lucky, shedding 25.7% year-to-date to rest at $32.41, including 1.8% yesterday. However, overall sentiment in the equity's options pits is bullish, as FireEye, Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 6.51 ranks in the 88th percentile of its annual range. Though, with over 15% of the stock's float sold short, some of these long calls may have been initiated by short sellers seeking an upside hedge. Whatever the motive, FEYE's short-term options are available for bottom-of-the-barrel prices, as its SVI of 52% ranks in the 13th percentile of all similar readings taken in the past year. Additionally, the stock's Schaeffer's Volatility Scorecard (SVS) of 100 indicates the shares have tended to make outsized moves in past year, relative to what the options market has priced in.

  • After selling off early in the year, LOCK has rebounded, and is now up 14.5% year-to-date to perch at $18.79. Overall sentiment in the options pits is bullish, as LifeLock, Inc.'s 10-day ISE/CBOE/PHLX call/put volume ratio of 114.20 registers in the 78th percentile of its annual range. Meanwhile, short-term volatility expectations are fairly modest; 30-day at-the-money implied volatility on LOCK is 44.7%, in the 35th annual percentile.


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