Unusual Options Activity

1. CLR- 20,000 June $35 puts were sold for $2.40-$2.45 each, against open interest of 330 contracts. Put activity is 7x the average daily volume. He/she is making a mildly bullish bet that Continental Resources shares won’t close below the $35 level on June options expiration (they get to keep the $2.40-$2.45 credit if stays above $35). Late in 2014 the stock bounced off of the multi-year support level at $30 and has recently been able to reclaim the 10-week exponential moving average (similar to the 50-day EMA). The drastic fall in oil prices has resulted in a once $80 stock been cut in half in just a few months as 2015 EPS estimates have been slashed to $0.91 from $3.59. Q4 earnings won’t be released until February 24th (dropped on the last 7 reports).
2. EXEL- More than 27,000 calls have traded so far with the single largest print being a buyer of 7,800 May $2 calls for $0.40 (68% of calls going on the offer). Call activity is 72x the average daily volume and the call to put ratio is 80:1 (implied volatility +25.6% to 127.23). Exelixis shares are on pace to close above the $2 resistance level today for the first time since late August. The company has Phase 3 data results for a metastatic renal cell cancer drug due out in the second quarter of 2015.
3. IDTI- The Mar $19/$23 bull call spread was put on 3,600 times for a $1.10 debit today. Volume was above the open interest in both options. Call activity was 4x the average daily volume and the call to put ratio was 744:1. Integrated Device Technology will report Q3 earnings on February 2nd (moved higher on the last 7 reports). Just prior to last quarterly report there was similar bullish options activity in the form of November call buying (earnings were in October). Shares remain in a long-term uptrend and were able to snap a three week losing streak on last week’s gain. IDTI is a $3B semiconductor company that has consistently grown the top line in the low double digits and trades at a P/E ratio of 20.63x (Mar 2016 estimates) with 15.2% EPS growth, P/S ratio of 5.41x, and a P/B ratio of 3.70x. On January 15th, Chardan Capital initiated the stock with a buy rating and a $22 price target on a peer to peer discount (25x multiple) and underlying strength in the business.
4. ZIOP- Someone rolled out 4,002 Apr $4 calls ($4.80 credit) into 8,004 Apr $9 calls ($1.90 debit) at noon EST. Volume was above the open interest in the Apr $9 calls. Call activity was 5x the average daily volume and the call to put ratio was 27:1. Yesterday, there was massive activity in the Feb $11 calls with more than 12,000 traded (vast majority bought for $0.30-$0.35). On January 13th, Ziopharm Oncology and Intrexon (XON) announced an exclusive licensing agreement with the University of Texas MD Anderson Cancer Center for the use of next-generation cancer therapies, which has helped push shares above the 2011 high $7.85. The day after this announcement, BMO Capital Markets upgraded the stock outperform from underperform (price target raised to $15 from $1) and Griffin Securities maintained their $12 price target.

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