2015-02-10 Unusual Options Activity (CAB) (HIMX)


Posted on February 10th, by Mitchell Warren in Free Articles, Options Risk Management, Smart Money Report, Unusual Options Activity. Comments Off on 2015-02-10 Unusual Options Activity (CAB) (HIMX)

Unusual Options Activity

  1. CAB- For the third day this year there has been unusual buying in the Feb $60 calls. Roughly 900 were bought this morning for $0.40-$0.50 each, against open interest of 1,069 contracts. January 7th and 20th were the other two days that saw action, paying up to $1.05. On average only 183 calls trade per day. Cabela’s reports Q4 earnings before the bell on February 12th (shares have gone up on 5 out of the last 7 reports). Since the March 2014 peak above $72, shares have fallen nearly 25% in that time. The stock now trades at a P/E ratio of 15.57x (2015 estimates) with 11.8% EPS growth, price to sales ratio of 1.08x, and a price to book ratio of 2.22x. Revenue is likely to hit the $4B mark annually this year, rising over 12%. With even some of the teen apparel retailers showing signs of life in recent months (most importantly the holiday season), low expectations and underperformance in the share price could setup for an upside earnings surprise later this week. Recent analyst rating changes include: TheStreet upgrading to buy from hold on February 5th, Raymond James initiating with an outperform rating on January 16th, and Imperial Capital initiating with an outperform rating ($62 price target). The options market is pricing in a $4.30 move, or 7.89%, in either direction through February options expiration.
  2. HAL- 10,000+ Mar 20 $41 puts were bought for $1.23-$1.30 each, against open interest of 435 contracts. The put to call ratio was 3:1 and put activity was at the daily average with 2 and 1/2 hours left of trading. Weakness in oil (WTI struggling to sustain a move above $54/barrel) is resulting in Halliburton shares snapping a 3-day winning streak. Wall Street EPS estimates for FY15 have been sliced to $2.15 from $4.82 per share just three months ago ($2.45 from $5.53 for FY16). Revenues is likely to shrink by more than 16% this year and stay there through 2016 to around $27B-$28B. Halliburton trades at a P/E ratio of 19.76x (2015 estimates) with -46.5% EPS growth, P/S ratio of 1.12x, and a P/B ratio of 2.27x. Even after the $30+ collapse since July the stock still trades at a premium valuation near 20x.
  3. HIMX- 5,000 Mar 20 $8 calls were purchased for $0.65 each, against open interest of 2,231 contracts. The call to put ratio is 75:1 and call activity is over 2x the average daily volume (implied volatility +5.2% to 78.03). The $1.3B maker of Google Glass also has Q4 earnings results due out on February 12th (down on 4 out of the last 7 reports). Earlier this morning the stock was down $2 from the January highs, but is now starting to see buyers come in on the test of the 200-day SMA. Shares trade at a P/E ratio of 15.74x (2015 estimates) with 13.6% EPS growth, P/S ratio of 1.60x, and a P/B ratio of 2.84x. Himax has one of the largest dividend yields (3.45%) of any U.S. tech company out there. Recently Credit Suisse downgraded the stock to neutral from outperform on February 9th, but Bank of America kept their top pick rating on January 26th. The options market is pricing in a $0.80 move, or 10.20%, in either direction through the end of this week.
  4. ZIOP- 5,000 Mar $11 calls were bought for $0.65-$0.75 each, against open interest of 845 contracts. The call to put ratio is 21:1 and call activity is 2x the average daily volume. This activity comes after last month’s April Apr $4 call roll to 8,004 Apr $9 calls for $1.90 and the massive buying in the Feb $10 and $11 calls on several occasions. 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 of $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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