Options Traders Take Sides On Booming Netflix, Intel

Netflix, Inc. (NFLX) and Intel Corporation (INTC) have attracted options traders from both sides of the aisle

Jan 30, 2017 at 12:27 PM
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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Stocks highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names of notable interest are streaming media stock Netflix, Inc. (NASDAQ:NFLX) and Dow component Intel Corporation (NASDAQ:INTC). Here's a quick look at how options traders have been approaching NFLX and INTC.

Most Active Options January 30

NFLX has shed 1.7% to $140.05 amid the broad-market slump today. The shares came within $1 of their recent record high on Friday, and are still sitting on a hefty 52.5% year-over-year lead. But the stock could see more gains should analysts up their outlooks -- at present, 13 firms still rate NFLX a "hold" or worse.

Meanwhile, NFLX has seen an unusual level of put buying relative to call buying in recent weeks, per its 10-day put/call volume ratio of 0.84 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE) and NASDAQ OMX PHLX (PHLX) -- within the top one-third of all readings from the past 12 months. While the February 140 call and March 145 call saw the largest rises in open interest over the past two weeks, the February 130 put was next in line, with a large portion of the action of the buy-to-open variety. Simply stated, buyers of the put are betting on -- or hedging against -- NFLX sinking below the $130 level before the close on Friday, Feb. 17, when the front-month option expires.

Today, NFLX puts are slightly accelerated, and it looks like bearish speculators may be purchasing new positions at the weekly 2/3 140- and 138-strike puts. But options traders have largely been sitting on the sidelines of late, as total options open interest on Netflix, Inc. ranks in the bottom 1% of all readings from the last 52 weeks. And it's an attractive time to premium buyers to strike, as NFLX's near-term options are pricing in low volatility expectations after the company's recent earnings report. In fact, the stock's Schaeffer's Volatility Index (SVI) of 29% is docked in the low 7th percentile of its annual range.

The broad-market slump is also weighing on INTC, which is off 1.2% at $37.53, even after receiving a price-target hike to $38 from $36 at Citigroup. The blue-chip stock hit a 15-year high of $38.45 on Friday following its quarterly earnings report, much to the delight of bullish traders. Still, there's some room for upgrades from the brokerage bunch, where one-third of analysts maintain "hold" or "strong sell" opinions.

Turning to the options pits, INTC has seen nearly three calls purchased for each put over the past 10 days at the ISE, CBOE, and PHLX. The resulting call/put volume ratio of 2.69 ranks higher than 78% of the past year's readings. But call selling has been popular as well. Among the options to see the biggest increases in open interest over the last two weeks -- namely, the April and March 38 calls, as well as the February 38.50 call -- data from the major exchanges indicates significant sell-to-open action. But there are still plenty of bulls on board, too, as the February 39 call saw notable buy-to-open activity last week, with call buyers betting on a fresh rally into multi-year-high territory.

Intel Corporation is up almost 22% year-over-year, and recently broke out above resistance at the $37 level -- which also corresponds to the supportive 30-day moving average. But that hasn't been enough to inspire options traders to get in on the action, as open interest is seated in the low 3rd percentile of its annual range. And like NFLX, INTC's short-term options are well-priced from a volatility perspective, thanks to a post-earnings volatility crush. The stock's SVI and 30-day at-the-money implied volatility are both docked at 17%, ranking in the low 14th and 10th percentiles of their respective 12-month ranges.

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