Too Many Options: SUNE, ZNGA, VALE, YELP, TEVA

by Enis May 1, 2014 6:32 am • Commentary

Light volume continues this week, even after the FOMC statement was released.  Calls dominated single stock volumes.

1.  SUNE – The solar power developer has seen persistently high call activity throughout the past 6 months.  Another call roll, as someone sold 52,507 of the May 20 calls at $0.70 to buy 47,128 of the July 20 calls for $1.74.  SUNE is expected to report earnings in the next couple weeks.  David Einhorn disclosed the bull case for the stock in his most recent quarterly letter.

2.  ZNGA – Stock has fallen 35% over the past 6 weeks.  The May17th 4.5 calls were very active yesterday, trading over 125k at an average price of 0.0974, mostly buyers initiating.  ZNGA has held above its 200 day ma this week.  ZNGA is still up 6.5% year-to-date after the large selloff.

3.  VALE – Stock hit a 1 month low intraday yesterday.  The Sept 12 puts traded over 60k at an average price of 0.49.  VALE’s low of the year is $12.29, which also happens to be its 5 year low.

4.  YELP – Ahead of last night’s earnings release, the May17th 60 calls were by the most active line, trading over 20k at an average price of $3.78.  That is a lot of premium for a trade with a break-even of $63.78, which is a result of YELP’s high implied volatility, and an implied move of around 13% in the options market.

5.  TEVA – The Jan15 50 / 62.50 call spread traded 10k times at $3.13 near midday.  TEVA reports earnings this morning, and is currently up 22% so far in 2014.