Options Check-Up: Five Below, Inc., T-Mobile US Inc, and Zillow, Inc.

Analyzing recent option activity on Five Below Inc (FIVE), T-Mobile US Inc (TMUS), and Zillow Inc (Z)

Jan 16, 2015 at 8:25 AM
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Among the stocks attracting attention from options traders lately are retailer Five Below Inc (NASDAQ:FIVE), wireless provider T-Mobile US Inc (NYSE:TMUS), and real estate website Zillow Inc (NASDAQ:Z). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on FIVE, TMUS, and Z.

  • FIVE has been a technical underperformer , shedding nearly 13% over the past 52 weeks to land at $33.32, including a 3.6% drop yesterday. Surprisingly, sentiment in the stock's options pits is trending bullishly. Five Below Inc's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 3.97 sits just 3 percentage points away from an annual optimistic climax. However, just over 24% of the equity's available float is sold short, so this call buying activity may be the result of short sellers hedging their bets. Short-term options for FIVE are slightly expensive at the moment, per its 30-day at-the-money (ATM) implied volatility (IV) of 45.9%, which ranks in the 69th annual percentile.

  • Shares of TMUS have also been on the decline, losing 10.5% year-over-year to sit at $29.18. Concurrently, sentiment in the stock's options pits has never been more bearish -- T-Mobile Us Inc's 10-day ISE/CBOE/PHLX put/call volume ratio of 18.01 is the highest such reading taken over the past year. Short-term volatility expectations on TMUS are middling right now, with 30-day ATM IV of 37.6% arriving in the 49th percentile of its annual range.

  • Z has also been technically weak, down roughly 42% from its July 2014 peak of $164.90 to close Thursday at $95.51. Sentiment in Z's options pits is bullishly skewed, with its 10-day ISE/CBOE/PHLX call/put volume ratio of 1.77 ranking in the 91st percentile of its annual range. It is important to note that a staggering 46.3% of Zillow Inc's available float is sold short (which would take 13 sessions to cover, at Z's average daily volume), so this call buying could be the work of short sellers protecting themselves from potential upside. Short-term options are currently more expensive than usual, with Z's 30-day ATM IV of 59.5% standing in the 71st percentile of all similar readings taken over the past year.

 

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