Early Options Trading on Alibaba, Tesla, Groupon, and Abercrombie & Fitch

Alibaba, Tesla, Groupon, and Abercrombie & Fitch are some stocks seeing heavy options trading today

Apr 20, 2017 at 12:03 PM
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Looking at the early action across Wall Street, Alibaba stock is staying hot -- even after Standpoint Research lowered its rating to "reduce" from "buy" -- with the shares adding 1.8% to trade at $112.76, while earlier touching a two-year high of $113.33. BABA now sports a 39.6% year-over-year lead, and options traders continue to target calls at an accelerated pace. In today's trading, call volume is at two times the intraday norm, with buy-to-open action taking place at the April 113 call, the most popular strike. These traders are betting on extended upside for BABA stock through tomorrow's close, when the contracts expire. Elsewhere, several large blocks of June 120 calls may also have been purchased.

Speaking of hot stocks, Tesla shares have gained 0.7% at $307.56. Calls have the advantage on an absolute basis, thanks to heavy interest in the April 310 call -- which has seen a mix buying and selling activity ahead of expiration tomorrow. Meanwhile, buy-to-open action could be taking place at the April 305 put -- the automaker's most active strike overall -- with bears betting on a quick pullback for TSLA stock. Long term, though, the shares have absolutely exploded since bottoming below $180 in mid-November.

There's also been heavy options trading on discount expert Groupon, with the shares up 3.3% at $3.91. Call volume is running at eight times the expected intraday rate, with the June 4 strike leading the way -- and data suggests traders are opening long positions. Meanwhile, it looks like another GRPN options trader may have closed her May 4 call, and rolled the position up to the May 4.50 strike, betting on extended gains for the shares. 

Looking back, GRPN stock has closed its mid-February bull gap that was triggered by upbeat earnings. Fortunately for shareholders, today's price action has the equity set to close above its 100-day moving average for the first time since April 3, suggesting it could've put in a bottom near its pre-bull gap highs.

Finally, it's shaping up to be a big day for retail stocks. Some of the most notable trading has gone down in Abercrombie & Fitch's options pits. Specifically, it looks like one trader bought to open 7,500 January 2019 10-strike calls for $3.40 each. If this is the case, the trader spent nearly $2.6 million (premium paid * contracts purchased * 100 shares per contract) to bet on ANF stock toppling the breakeven price of $13.40 (strike plus price paid) over the next year and eight months. Abercrombie & Fitch stock has lost 59% over the past 52 weeks, despite being up 7.2% today at $11.91.
 

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