Options Check-Up: Alcoa Inc., Peabody Energy, and Micron Technology

Analyzing recent option activity on Alcoa Inc (AA), Peabody Energy Corporation (BTU), and Micron Technology, Inc. (MU)

Jan 6, 2015 at 8:11 AM
facebook X logo linkedin


Among the stocks attracting attention from options traders lately are aluminum magnate Alcoa Inc (NYSE:AA), coal issue Peabody Energy Corporation (NYSE:BTU), and semiconductor firm Micron Technology, Inc. (NASDAQ:MU). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on AA, BTU, and MU.

  • AA performed well in 2014, adding 48.5%. More recently, the stock underperformed the S&P 500 Index (SPX) by over 7 percentage points in the past month, and dropped 5.8% yesterday, landing at $14.96. Alongside this drop -- and ahead of the company's unofficial start to earnings season next Monday, Jan. 12 -- has come an uptick in bearish activity in the equity's options pits. Alcoa Inc's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.52 stands just 4 percentage points away from an annual peak. Additionally, AA's Schaeffer's put/call open interest ratio (SOIR) of 0.89 ranks higher than 86% of all similar readings taken over the past year, showing a bigger-than-usual preference for short-term puts over calls. Near-term bets are slightly more expensive than usual, as AA's Schaeffer's Volatility Index (SVI) of 39% is higher than 57% of all comparable metrics taken in the previous 12 months.

  • On the other hand, shares of BTU have been abysmal, shedding 62.1% year-over-year to sit at $7. The stock hit a fresh 13-year low of $6.92 in intraday action yesterday, before settling 9.6% lower on the day. Accordingly, sentiment in the equity's option pits is trending bearishly. Peabody Energy Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.41 ranks in the 55th percentile of its annual range, and the stock's SOIR of 0.85 sits 16 percentage points away from an annual high. In concurrence with this activity, BTU's SVI of 64% sits in the 73rd percentile of its annual range, showing that short-term options are expensive, from a historical standpoint.

  • MU had an exceptional 2014, gaining roughly 61%. Yesterday, however, the stock lost 2.8% to perch at $33.78, ahead of today's scheduled earnings report. Despite MU's long-term uptrend, bearish activity in the security's option pits is rising. Micron Technology, Inc.'s SOIR of 0.63 ranks in the 68th percentile of its annual range, while its 50-day ISE/CBOE/PHLX put/call volume ratio of 0.40 sits just 2 percentage points away from a pessimistic peak. Short-term options are averagely priced, historically speaking, as the equity's SVI of 49% sits in the 53rd percentile of its annual range. Short sellers have also taken an interest in the equity; short interest accounts for over 8% of the stock's float, which would take nearly five sessions to cover, at average trading volumes. If the shares of MU continue their upward mobility -- or if the company reports solid earnings tonight -- a short-squeeze situation could send the stock even higher. In fact, in the past four quarters, MU has averaged a single-session post-earnings gain of 3.7%.
 

Target Effortless Triple-Digit Gains Every Sunday Evening For Life!

This is your chance to triple your profit potential on Sunday evenings, without spending all your free time watching the market.

On Sundays, as a Weekend Plus subscriber, you’ll get up to 6 trades every Sunday, each targeting gains of 200% or more.

Start targeting gains like the ones our subscribers have seen recently, including:

213.3% GAIN on AutoNation calls
100.0% GAIN on Monster Beverage calls
100.4% GAIN on Walgreens Boots Alliance puts
100.4% GAIN on ON Semiconductor calls
257.7% GAIN on Dell calls

101.0% GAIN on Apollo Global Management calls
103.6% GAIN on JP Morgan  Chase calls
105.3% GAIN on DraftKings calls
101.3% GAIN on Airbnb calls
203.0% GAIN on Shopify calls
102.0% GAIN on Cboe Global Markets calls
100.9% GAIN on Boeing calls
102.1% GAIN on Microsoft puts
102.3% GAIN on First Solar calls
101.5% GAIN on PulteGroup calls
101.0% GAIN on Apple calls
209.4% GAIN on NXP Semiconductors calls
100.8% GAIN on Uber Technologies calls
100.4% GAIN on Academy Sports and Outdoors puts
102.2% GAIN on Trade Desk calls
100.8% GAIN on DoorDash calls
100.0% GAIN on Camping World Holdings puts
100.0% GAIN on Cboe Global Markets calls
100.2% GAIN on C3.ai calls
238.5% GAIN on Oracle calls

 
 
 


 
 

Rainmaker Ads CGI