Each week on Sunday night I’ll be posting an account of several stocks that had unusual options activity during the prior week and what that may mean. Although traders can never really be sure who is making each trade and why, it’s important to be aware of notable options activity.
With that, let’s recap 10 stocks that saw unusual options activity this past week and what, if any, significance these trades may have.
Callaway Golf (ELY) – 1,000 Nov $10 calls were bought for $0.96-$1.07 and 2,000 Nov $9 puts were sold for $0.41-$0.45. Options activity was 15x the average daily volume. Shares of ELY are nearing a breakout above the $10 resistance level. Last week, Callaway Golf said they see sales up 1% for Q2.
Noodles (NDLS) – 2,000+ May $22.50 calls were purchased for $0.60-$1.00 and 2,000 May $20 puts were sold for $0.95-$1.00. Noodles (NDLS) earnings are due out on May 5th. Wedbush believes that comps have bottomed and are now moving in the right direction. Shares are breaking out above $20.76.
Citrix Systems (CTXS) – More than 4,000 May $70 calls have traded with the majority being bought for $0.75-$0.95. Call activity was 6x the average daily volume. Citrix Systems (CTXS) issued light Q2, FY15 revenue guidance on April 22nd, but did top Q1 estimates. They will outline their business strategy on May 12th. Looking at the charts, a close above $67 would setup for a move to the low to mid $70’s.
TJX Companies (TJX) – A rollout from 2,000 June $67.50 calls ($0.50-$0.55 credit) into 2,000 June $65 calls ($1.40 debit). Earnings for TJX Companies are due out on May 19th (shares have moved higher on 3 straight reports).
Adobe Systems (ADBE) – The July $70/$82.50 bull risk reversal was put on 14,000 times for a $0.21 credit. Options activity was 8x the average daily volume. Implied volatility spiked over 13% after this trade. The stock recently bounced off of support at the 40-week SMA. Stephens gave Adobe Systems (ADBE) an overweight rating and a $100 price target on April 9th.
Masco (MAS) – Sizable buying in the May $26 calls (1,800+ traded) and $27 calls (2,500+ traded). Call activity was 5x the average daily volume. There was large buying in the July $27 calls on March 13th and 30th. Shares had been consolidating between $26 and $27 for 3 months, but were able to close above the key resistance level on Friday.
Charter Communications (CHTR) – 5,000 June $200 calls were purchased for $2.75-$3.10. Call activity was 15x the average daily volume. The company is in talks to acquire Bright House Networks (#4 cable provider in the U.S.) for $10.4B.
VeriFone Systems (PAY) – 5,100+ June $39 calls traded with the majority being purchased for $0.60-$0.65. The bullish order flow helped VeriFone Systems (PAY) stock close above the $36.50 resistance level. On April 14th, Goldman Sachs upgraded PAY to buy with a $44 price target.
Rockwell Medical (RMTI) – Nearly 2,500 May $10 puts traded with the majority being bought for $0.85-$0.95, against open interest of 2,271 contracts. Q1 earnings are due out on May 7th (shares have fallen on 2 out of the last 3 reports). The stock broke through support at the $9.75 on Thursday. On February 27th, Brean Capital set a price target of $4.00 (less than half of the current value).
Visa (V) – 5,430 June 5 weekly $64 puts were sold for $0.73. The seller of 8,800+ May 29 weekly $66 puts is still holding. Put selling can tend to be overlooked, but it can be a good predictor of stocks that are ready to rally or at least have limited downside risk. On April 30th, Visa reported that Q2 revenue rose 7.8% as payment volumes were up 11% to $1.2T. Solid growth is likely to persist with recent developments out of China. China’s State Council says they will allow firms like MasterCard and Visa to apply for licenses for bank card clearing businesses (could be a year away from having Chinese operations).
Thanks for reading and have a great week!
Follow Mitchell on Twitter: @MitchellKWarren
No position in any of the securities mentioned at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.