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.
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.
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.
Trading the News: A Contrarian View.
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here.