Options Check-Up: AbbVie Inc., Broadcom Corporation, and Chevron

Analyzing recent option activity on AbbVie Inc (ABBV), Broadcom Corporation (BRCM), and Chevron Corporation (CVX)

by Griffin Kruse

Published on Jan 29, 2015 at 8:49 AM
Updated on Apr 20, 2015 at 5:32 PM

Among the stocks attracting attention from options traders lately are drugmaker AbbVie Inc (NYSE:ABBV), semiconductor issue Broadcom Corporation (NASDAQ:BRCM), and oil giant Chevron Corporation (NYSE:CVX). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on ABBV, BRCM, and CVX.

  • Shares of ABBV have been trending lower since hitting a record peak of $70.76 in early December, with shares declining 12.6% to rest at $61.85. AbbVie Inc is set to release fourth-quarter earnings data before the open on Friday, and bearish sentiment in the stock's options pits has been ramping up. ABBV's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 3.17 is just 2 percentage points from an annual high. Meanwhile, short-term volatility expectations are fairly modest -- 30-day at-the-money implied volatility on ABBV is 26%, in the 73rd annual percentile.

  • BRCM has been on a tear, gaining 28.6% since the end of May to hit $40.97. However, ahead of tonight's earnings report, sentiment in the stock's options pits is bearish, with Broadcom Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.66 registering in the 94th percentile of its annual range. Expectations for a big post-earnings move are growing, too, as BRCM's Schaeffer's Volatility Index (SVI) of 34% is higher than nearly three-fourths of all similar readings taken over the past year.

  • CVX is in the middle of a rough patch, with the shares down 23.2% at $103.71 since hitting an all-time high of $135.10 on July 24. Accordingly, sentiment in the options pits is bearish, with Chevron Corporation's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.92 sitting in the 70th percentile of its annual range. What's more, the security's Schaeffer's put/call open interest ratio (SOIR) of 1.74 is the highest reading taken in the last 52 weeks, suggesting short-term speculators are much more put-heavy than usual on CVX. Traders are paying a fair price for their near-term bets on the equity, per its SVI of 24%, which is in the 58th percentile of its annual range.

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