2015-01-26 Unusual Options Activity (CTRX) (EMR)

Posted on January 26th, by Mitchell Warren in Free Articles, Options Risk Management, Smart Money Report, Unusual Options Activity. Comments Off on 2015-01-26 Unusual Options Activity (CTRX) (EMR)

Unusual Options Activity

  1. COUP- Over 2,800 Feb $15 calls were bought for $1.25 each, against open interest of 217 contracts. The call to put ratio is 23:1 and call activity is 8x the average daily volume (implied volatility +8.4% to 82.13). This trade was tied to 145,000 shares at $14.90. Coupons.com will report Q4 earnings on February 9th (moved higher on 2 out of its only 3 previous reports). Shares have fallen $5 in less than three weeks, but is so far holding above the 100-day simple moving average. Bank of America initiated the stock with a buy rating and a $30 price target on April 1st and reaffirmed their bullish stance on November 5th. The company has been able to top analyst quarterly estimates and is likely to see 200% EPS growth this year and a double in earnings in 2016 (Coupons.com has more than 2,000 brands on their digital platform).
  2. CTRX- 1,000 Jan 2016 $50 calls were purchased for $6.90-$7.50 each, against open interest of 94 contracts ($700K+ worth of calls). Call activity was nearly 3x the average daily volume. Over the last two months, Catamaran shares have struggled to sustain a move above the $52-$53 resistance level. If this key level is finally able to be breached then it would setup for a return to the 2013 highs around $58. The stock trades at a P/E ratio of 20.17x (2015 estimates), price to sales ratio of 0.53x, and a price to book ratio of 2.09x. Earnings and revenue are expected to increase in the low double digits this year (company has a track record of beating quarterly projections). The managed healthcare company was recently initiated with an overweight rating and Stephens on January 21st.
  3. EMR- More than 7,000 Feb $57.50 puts have traded today with the majority being bought on the offer for $1.50-$1.65 each, against open interest of 2,940 contracts. The put to call ratio was 8:1 and put activity was almost 6x the average daily volume (IV +7.4% to 26). Emerson Electric is set to release Q1 earnings on February 3rd. The $40B industrial company has saw its shares drop after earnings on 5 straight reports despite topping estimates on two occasions. Since breaking down below the 40-week simple moving average in July the stock has been slowly drifting lower, now below the $60 level. Emerson is going to flat revenue growth for FY15 with mid single digit EPS growth and trades at a nearly 15x multiple (3.21% dividend yield).
  4. WLL- 13,000 June $22.50 puts were sold for $1.81-$1.90 each, against open interest of 709 contracts. On average, only 2,763 puts trade per day. This trader is willing to step in after the 68%+ plunge in the share price since August, positioning for Whiting Petroleum shares to holding above the $22.50 level through June options expiration (breakeven at $20.60). The bear market in energy prices has resulted in EPS estimates for Whiting to go from $4.76 per share to -$0.89 per share in 2015 in just the last three months (top line growth constant at 12%). Zacks, an investment research firm, changed their bearish stance on January 23rd by upgrading the stock to neutral from underperform.

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