Options Bulls Hungry For More Blackstone Group (BX) Upside

Blackstone Group LP (BX) traders are buying long-term call options

Apr 10, 2015 at 2:54 PM
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Blackstone Group LP (NYSE:BX) is up 2% to $39.97 -- and earlier notched a fresh all-time high of $40.20 -- following a couple of high-profile M&A developments. Today's boost is more of the same for the shares of BX, which have gained 50.5% since notching an annual low of $26.56 on Oct. 16. Accordingly, BX's long-term calls are hot, with some investors rolling the dice on the security to continue its uptrend throughout 2015.

BX calls are trading at four times their average intraday clip, and are outpacing puts by about a 4-to-1 ratio. The day's most active contract by a considerable margin is the January 2016 42-strike call, where buy-to-open activity has been detected. By purchasing this call, traders expect the shares of BX to muscle their way above the strike price by the close on Friday, Jan. 15, 2016, when the contract expires.

Today's appetite for calls is par for the course, as BX's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 12.99 ranks in the 99th percentile of its annual range. Echoing this indicator is the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.83, which stands higher than just 29% of all equivalent readings taken over the past year. Said another way, short-term speculators have rarely been this call-heavy on BX.

Elsewhere, the brokerage bunch is overwhelmingly bullish on BX. Nine out of 10 covering analysts rate the stock a "buy" or "strong buy," with no "sell" or "strong sell" recommendations to be found.

On the earnings front, Blackstone Group LP -- which will report first-quarter results before the open on Thursday, April 16 -- has performed well over the past two years. Specifically, in the session immediately following its last eight earnings reports, BX has gained an average of 1.6%. Traders are paying relatively inexpensive prices for their short-term bets on the stock, as its 30-day at-the-money implied volatility (IV) of 18.7% arrives in the 2nd percentile of its annual range.

Daily Chart of BX Since October 2014

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