Today's column includes a look at a rise in call trading on Ford
) and Suncor Energy (
), while put trading jumped on Amazon.com (
). Each day,
3 Stocks to Watch
focuses on stocks seeing heavy options trading and gives you a
unique insight into each stock's sentiment backdrop.
After the close
on Thursday, Amazon.com Inc. (
posted a fourth-quarter profit of $416 million, or 91 cents per
share, as sales jumped by 36% to $12.95 billion. Analysts were
expecting earnings of 88 cents per share on revenue of $13 billion.
However, Amazon said that its fourth-quarter operating margins were
3.8%, below the 4.2% Wall Street was looking for. What's more, the
company forecast first-quarter operating income between $260
million and $385 million, implying a margin range of 2.9% to 3.9%.
The current consensus estimate for first-quarter operating margins
Options players responded by sending more than 294,500 contracts
across the tape. This surge in volume was more than four times the
equity's average daily trading volume of 67,386 contracts,
according to data from WhatsTrading.com. Furthermore, approximately
53% of the volume changed hands on the put side.
Sentiment toward the security is still firmly in the bulls'
camp. The International Securities Exchange (ISE) reports that 1.11
calls were purchased to open for every one put purchased to open
during the past 10 trading sessions. This ratio of calls to puts is
higher than 63% of all other readings taken during the past 52
Meanwhile, the Schaeffer's put/call open interest ratio (SOIR)
for AMZN comes in at 0.96, which is lower than 86% of all those
taken during the past 52 weeks. In other words, short-term options
players have been more optimistically aligned toward the shares
only 14% of the time during the past 12 months.
Wall Street still has a bullish outlook when it comes to the
online retailer. According to
, the stock has earned 23 "buy" ratings, 10 "holds," and two
Technically speaking, the shares of AMZN are down roughly 5%
since the beginning of the year, falling below support at their
10-day and 20-day moving averages. However, the stock is currently
clinging to longer-term support at its rising 20-week trendline.
The shares of AMZN have not logged a weekly close below this moving
average since mid-August.
Ford Motor (
Ford Motor Company (
) was also punished on Friday, after the automobile manufacturer
surprise drop in fourth-quarter earnings
. Ford Motor reported net income of $190 million, or 5 cents a
share. Operating profit came in at $1.3 billion, or 30 cents a
share. Analysts were expecting operating profits of 48 cents a
share. Ford's fourth-quarter revenue was $32.5 billion.
Meanwhile, more than 1,173,400 contracts crossed the tape on
Friday, in response to the earnings news. This surge in volume was
more than six times the equity's average daily trading volume of
180,763 contracts, according to data from WhatsTrading.com. In
addition, approximately 64% of the volume changed hands on the call
Overall, there is a slight bullish bias among options players
when it comes to F. The ISE and Chicago Board Options Exchange (
) report that 4.4 calls have been purchased to open for every one
put purchased to open during the past 10 trading sessions. This
ratio of calls to puts is higher than 72% of all those taken during
the past year. What's more, the SOIR for F comes in at 0.63, which
is lower than more than half of the readings taken during the past
Wall Street is split down the middle when it comes to the car
company. According to
, analysts have awarded it seven "strong buys," six "holds," and
one "strong sell."
Elsewhere, short sellers are adding to their bearish bets.
During the most recent reporting period, the number of F shares
sold short increased by 7.3% to 192 million. The simultaneous
increase in both call buying and short selling could indicate that
short sellers are hedging their pessimistic positions with
optimistic options on F.
From a technical perspective, the shares of F plunged more than
13% on Friday, falling below key support at their 10-week moving
average. However, the stock may find support at its rising 20-week
trendline. F has been guided higher by these moving averages since
Suncor Energy (
Options traders jumped on Suncor Energy Inc. (
) on Friday, as more than 55,900 contracts changed hands. This
surge in volume was more than three times the stock's average daily
trading volume of 18,414 contracts, according to data from
WhatsTrading.com. Furthermore, options players were feeling
optimistic, as 86% of the volume changed hands on the call
Suncor will report earnings before the open on Wednesday, Feb.
Despite traders showing a preference for calls on Friday, puts
have dominated on the ISE. During the past two trading weeks, 1.2
SU puts have been purchased to open for every one call purchased to
open. This ratio of puts to calls is higher than 86% of all those
taken during the past year.
Meanwhile, the SOIR for SU comes in at 0.86, which is higher
than 95% of all those taken during the past 52 weeks. In other
words, short-term options players have been more pessimistically
aligned toward the shares only 5% of the time during the past 52
As opposed to options players, Wall Street is totally enamored
of the shares. According to
, the stock has earned nine "buy" ratings and four "holds."
Technically speaking, the shares of SU have tacked on more than
4% since the start of 2011, and are riding the support of their
10-week and 20-week moving averages higher. In fact, the security
tagged a new two-year high of $40.81 on Friday, and are now trading
north of round-number resistance at the $40 level.
Trading the News: A Contrarian View.
Check out this special report from Bernie Schaeffer
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