Options Check-Up: Salesforce.com, Ebix, and EMC

Analyzing recent option activity on CRM, EBIX, and EMC

Jan 21, 2015 at 8:31 AM
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Among the stocks attracting attention from options traders lately are cloud company Salesforce.com, inc. (NYSE:CRM), software maker Ebix Inc (NASDAQ:EBIX), and IT issue EMC Corporation (NYSE:EMC). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on CRM, EBIX, and EMC.

  • CRM has been a technical laggard over the past 52 weeks, shedding about 6% of its value year-over-year to sit at $57.29. What's more, Salesforce.com, inc. has underperformed the S&P 500 Index (SPX) by nearly 6 percentage points over the past two months. Accordingly, sentiment in the stock's options pits is nearing a bearish peak. CRM's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.91 ranks higher than 99% of all similar readings taken over the past year. Simply stated, puts have been bought to open over calls with more rapidity just 1% of the time within the past year. Meanwhile, the stock's near-term options are relatively cheap, per its Schaeffer's Volatility Index (SVI) of 31%, which is in the 28th percentile of its annual range.

  • On the other hand, shares of EBIX have skyrocketed recently, adding roughly 38.4% year-to-date. What's more, the stock notched a 5.95% gain just yesterday -- and hit a two-year peak of $23.57 along the way -- to settle at $23.51. Not surprisingly, sentiment in the options pits is almost unanimously bullish. Ebix Inc's staggering 10-day ISE/CBOE/PHLX call/put volume ratio of 88.87 is in the 99th percentile of its annual range. However, with nearly half of the security's available float sold short, a portion of this call buying could be at the hands of short sellers hedging against the possibility of additional upside. Regardless, short-term options for EBIX are currently available for bottom-of-the-barrel prices, relatively speaking, per its SVI of 37%, which ranks in the 13th percentile of all similar readings taken over the past year.

  • EMC has struggled since hitting a 13-year high of $30.92 on Dec. 26, and has shed more than 10%. Additionally, the shares recently lost their footing atop their 200-day moving average, and this trendline that has served as support for the equity's last two pullbacks now seems to have switched roles to act as resistance. Coinciding with this recent slump is an increase in bearish sentiment among option traders, as evident by the equity's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.80, which ranks in the 86th annual percentile. Near-term options for EMC are slightly more expensive than usual, with the security's SVI of 24% sitting in the 60th percentile of its annual range.
 

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