Unusual Options Activity

1. AMAT- Over 10,000 Feb 20 $24 calls have traded today with the majority being bought for $1.04-$1.09 each, against open interest of 5,627 contracts. The call to put ratio was 4:1 as implied volatility popped 5.5% to 42.52. On top of this activity there is still massive open interest in the high $20 strike calls in the April options expiration from buying in recent months. Applied Materials will be releasing Q1 earnings on February 11th (stock has gone up after earnings on 3 out of the last 4 reports). On January 20th, Credit Suisse raised their price target to $30 from $26 (outperform rating). Shares tested the prior resistance level, turned current support at $23 recently and was able to bounce (no major resistance until $25.50-$26.00 now).
2. AMD- Another 25,000 Feb 20 $2.50 puts were purchased for $0.25 each, following a weak Q4 earnings report last night. They missed EPS estimates by $0.01, revenues fell 22%, margins shrank by 600 basis points, and issued weak guidance for the first quarter. On January 13th, nearly 60,000 of the Feb 20 $2.50 puts were purchased for $0.16-$0.17 each. Morgan Stanley lowered their price target to $2.25 from $2.50 this morning (shares hit a multi-year low of $2.14 after the opening bell). Put activity was over 3x the average daily volume.
3. CMA- The July $35/$40 bear put spread was put on 10,000 times for a $1.75 debit. Volume was above the open interest in both options. The put to call ratio was 25:1 and put activity was 26x the average daily volume. Total puts traded (21,922 contracts) is more than the total open interest in puts (19,239 contracts). Comerica shares have been underperforming since oil prices have been in free fall (have sizable loans to energy companies). This on top of a low interest rate environment led to a 22%+ decrease in the stock since the September high of $52.49. Earnings are expected to drop 2.8% in 2015 to $3.07 per share, meaning the stock trades at a P/E ratio of 13.28x (not cheap compared to many financials).
4. CRUS- Roughly 4,500 Feb 20 $24 calls were bought for $1.60-$1.80 each, against open interest of 629 contracts. The call to put ratio was 5:1 and call activity was nearly 3x the average daily volume. Cirrus Logic will be reporting Q3 earnings on January 28th (shares have gone up after earnings on 2 out of the last 3 reports). The stock has rallied since the start of December and are now closing in on a test of the key technical level at $25. A close above $25 on a weekly basis would setup for a return to the lower $30’s later this year. On December 15th, Barclays upgraded the stock to overweight from underweight ($28 price target). The company continues to grow revenues at a 15%+ rate annually.
5. TDW- 1,400 Apr $35 calls were purchased for $1.00 each, against open interest of 155 contracts. This may sound like a small order relative to the trades above, but call activity is 11x the average daily volume in Tidewater. Total call open interest was only 1,389 contracts. Q3 earnings are expected to be released on February 2nd. From the June highs the stock is down 44.85% as a result of the collapse in energy prices. EPS estimates for FY16 have dropped to $3.68 from $4.85 in just three months, putting the P/E ratio at 8.41x on a company paying a 3.22% dividend. On January 2nd, Argus lowered their price target to $44 from $53.

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AMAT AMD CMA CRUS TDW unusual options activity