3 Stocks to Watch: TD Ameritrade, Domino's Pizza, and Mellanox Technologies

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Today's column includes a look at a rise in call trading on TD Ameritrade ( AMTD ) and Domino's Pizza ( DPZ ), while put trading jumped on Mellanox Technologies ( MLNX ). 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.

TD Ameritrade ( AMTD )

Options players flocked to TD Ameritrade Holding Corp. ( AMTD ) on Thursday, as more than 6,900 call contracts crossed the tape. This surge in call volume was nearly triple the stock's average daily call trading volume, according to data from WhatsTrading.com. In addition, more than 78% of the volume changed hands at the ask price, indicating that most of the calls were likely purchased.

Yesterday's jump in call trading runs counter to the general sentiment picture on AMTD. During the past 10 trading sessions, nearly three puts have been purchased to open for every one call purchased to open on the International Securities Exchange (ISE). This ratio of puts to calls is higher than 80% of all those taken during the past 52 weeks, pointing to a growing pessimism.

What's more, the Schaeffer's put/call open interest ratio (SOIR) for AMTD comes in at 0.96, as put open interest nearly equals call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 66% of all those taken during the past year.

Meanwhile, short interest on AMTD dipped by 8.6% during the past month, to 24.3 million shares. However, this accumulation of bearish bets accounts for more than 11% of the company's total float and is 11 times the stock's average daily trading volume.

Finally, Wall Street is skeptical of the shares. According to Zacks , the stock has earned eight "buy" ratings, nine "holds," and one "strong sell."

Technically speaking, the shares of AMTD have gained nearly 8% since the beginning of 2011. The stock has enjoyed a solid rally along the support of its 10-day and 20-day moving averages since early September -- and could rally even higher, should the short sellers be pressured into unloading their pessimistic positions.

 DAILY CHART OF AMTD SINCE AUGUST 2010 WITH 10-DAY AND 20-DAY MOVING AVERAGES

Domino's Pizza ( DPZ )

Call trading dominated on Domino's Pizza Inc. ( DPZ ) on Thursday, as more than 5,000 call contracts crossed the tape. This surge in activity was more than 22 times the stock's average daily call volume, according to data from WhatsTrading.com. In addition, 75% of the volume changed hands at the ask price, indicating that most of the volume was likely purchased.

Call volume has been on the rise on the ISE and Chicago Board Options Exchange ( CBOE ). During the past 10 trading sessions, 49 calls have been purchased to open for every one put purchased to open. This ratio of calls to puts is higher than 78% of all those taken during the past 52 weeks.

What's more, the SOIR for DPZ comes in at 0.19, as call open interest outnumbers put open interest by more than five to one. This ratio is lower than 70% of all those taken during the past year. In other words, short-term options players have been more optimistically aligned toward the shares only 30% of the time during the past 52 weeks.

Short interest is on the decline, as well. During the past month, the number of DPZ shares sold short dropped by nearly 18% to 3.3 million. However, this accumulation of pessimistic positions still accounts for 6.3% of the company's total float, and is six times the stock's average daily trading volume.

Meanwhile, DPZ isn't getting a lot of love from Wall Street. According to Zacks , the stock has earned five "buy" ratings and eight "holds."

From a technical perspective, DPZ is down slightly on the year. The shares are attempting to hold onto support at their rising 20-day moving average, while hitting resistance at their 10-day trendline. These short-term moving averages have guided the security higher since late November. A solid close back above the stock's 10-day trendline could put DPZ back on its upward path.

 DAILY CHART OF DPZ SINCE NOVEMBER 2010 WITH 10-DAY AND 20-DAY MOVING AVERAGES

Mellanox Technologies ( MLNX )

Put trading was the name of the game when it came to Mellanox Technologies Ltd. ( MLNX ) on Thursday. The stock saw more than 4,000 put contracts cross the tape, which is 11 times the equity's average daily trading volume, according to data from WhatsTrading.com. In addition, 66.5% of the volume crossed the tape at the ask price, indicating those contracts were likely purchased.

Puts have been a growing favorite on the ISE. During the past two trading weeks, 32.6 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 87% of all those taken during the past 52 weeks.

What's more, the SOIR for MLNX comes in at 1.76, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 99% 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 1% of the time during the 12 months.

Wall Street also has its doubts about the firm. According to Zacks , the stock has earned two "strong buys" and five "holds."

Technically speaking, the shares of MLNX have gained 4.5% since the start of the year, rallying along the steadfast support of their 10-day and 20-day moving averages. These trendlines have guided the shares higher since late August and should help push the stock through short-term resistance at the 28.50 level.

 DAILY CHART OF MLNX SINCE AUGUST 2010 WITH 10-DAY AND 20-DAY MOVING AVERAGES

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: AMTD , CBOE , DPZ , MLNX

Schaeffer's Investment Research

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