Tuesday’s Notable Options Activity: $EMC & $NTAP

by Dan April 15, 2015 8:23 am • Commentary

Here is some generally directional, untied options activity that caught my eye during Tuesdays trading:

1. NTAP – the enterprise storage company saw call buying shortly after the open yesterday, with 3500 of the May 36 calls bought to open for 69 cents when the stock was $35.41. A total of 14,000 traded on the day, all were opening as there was only 246 of open interest coming into the session.  The company is scheduled to report their fiscal Q4 results on May 20th, a few days after May expiration.  NTAP has been the target of activist investors in the past, with Elliot Management accumulating a 6% position in the stock two years ago with the intent to push for greater cash return.  Interestingly, Elliot got their way but exited their stake a year later as the stock was lower.  With an $11 billion market cap, and $5.25 billion in cash, and only $1.5 billion in debt I suspect this is a fairly easy name for activists to once again set their sites on as the stock is approaching 52 week lows and down 13% on the year:

NTAP 2 year chart from Bloomberg
NTAP 2 year chart from Bloomberg

2. EMC – sticking with tech, data storage, activists, specifically Elliot Management, one of their other targets, EMC saw opening call buying yesterday, when the stock was $26.18 a trader bought to open 20,000 Apr 26 calls for 30 cents (28,000 traded on the day).  Again these calls will miss the company’s earnings event on April 22nd just like the NTAP trade detailed above.  As of Elliott’s last 13F filing, the hedge fund owns 33 million shares.  EMC has a bit more leverage on their balance sheet as a % of their $52 billion market cap, with $5.5 billion of debt, and $8.3 billion in cash.