Unusual Options Activity

1. ADSK- Call activity was 2x the average daily volume, which was led by buying in the Feb $55, Mar $57.50, Apr $57.50, and Jan 2016 $57.50 calls. Volume was above the open interest in all four options. The call to put ratio was 9:1 and implied volatility rose 7.8% to 30.17. This bullish activity follows a seller of more than 5,000 Feb $52.50 puts on February 2nd. Shares of Autodesk have been in the process of putting in a bottom this week. Read more about the company and Monday’s unusual options activity here.
2. BWLD- Roughly 1,500 Feb $170 puts were bought for $4.00 each, against open interest of 646 contracts. The put to call ratio is 1.5:1 and put activity is over 4x the average daily volume (IV +5.3% to 46.68). This trade comes just one day before Buffalo Wild Wings reports Q4 earnings in the afternoon (moved higher after earnings on 4 out of the last 7 reports). February options are pricing in a $15.75 move in either direction through expiration. Heading into the announcement, the stock is off about $10 from the January highs, but is so far holding on the test of the 10-week EMA. The company trades at a relatively highs forward multiple just north of 30x. However, they have had a reputation of crushing earnings estimates (beat for 6 straight quarters by $0.04-$0.15) and likely to grow revenue by 19-20% annually over the next 2 years. On January 22nd, Barclays upped their price target to $210 from $177. Short interest has picked up since the previous update, now standing at 12.82% of the float.
3. FAST- 10,000 Mar $43 puts were purchased for $1.55 each, against open interest of 12 contracts. On top of that there were over 3,000 Mar $44 puts bought at the same time for $2.05 each, against open interest of 16 contracts. The put to call ratio was 37:1 and put activity was 35x the average daily volume (IV +20% to 26.33). Prior to these trades the total put open interest was just 10,442 contracts. On January 15th, Fastenal lighter than expected Q4 sales due to a slowdown in the construction market. Since the second quarter of 2014 the stock has been trending lower and today’s 6%+ tumble sets up for a retest of the October lows in the $39-$40 range. Fastenal trades at a P/E ratio of 22.35x (2015 estimates) with 15.1% EPS growth, price to sales ratio of 3.63x, and a price to book ratio of 7.07x. Revenue growth is projected to stay in the lower double digit range through at least 2016 (13.1% this year and 12.2% next year). Wall Street analysts have an average price target of $48.40, but in recent months many targets have been lowered. Short interest has actually increased by about 500K recently, bringing the total to just over 12% of the float.
4. LUV- Call activity is just above the daily average half way through the trading session. This is due to sizable buying in the Feb 20 $45 calls for $1.10 and Mar 20 $50 calls for $0.60 (this likely being a closing of an existing short call position). The call to put ratio was 13:1 as implied volatility ticked up 1.6% to 40.64. Oil prices falling about 4% this morning has provided relief to Southwest Airlines. Shares revisited support at the $42 level earlier this week, but are setting up for a return to the all-time highs in the coming days. (LUV) trades at a P/E ratio of 12.75x (2015 estimates) with 75.6% EPS growth, P/S ratio of 1.57x, and a P/B ratio of 4.32x. Top line is likely to accelerate to 5.9% from 5% growth in 2015 to about $20B annually. On January 28th, Credit Suisse upgraded the stock to outperform from neutral and raised their price target to $62 from $48.

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ADSK BWLD FAST LUV unusual options activity