Today’s Bullish Activity
Leading the point gainers list this morning is G-III Apparel Group Ltd. (GIII) after posting Q1 earnings of $0.15 per share ($0.08 ahead of the $0.07 estimate) on revenue of $433M (well above expectations for $405.76M) last night after market close. The company?s Q2 guidance was mixed (EPS in-line with revs slightly higher) but full-year 2016 earnings were increased to $2.66-2.76 EPS on revenue of $2.4B (from a prior $2.52-2.63 and $2.37B). Several analyst firms increased price targets on the report. Shares of GIII last traded up $4.21 (or 7.01%) to $64.30 which is just below the new all-time high of $65.77 hit near the open. Calls were slightly outnumbering puts nearly with the June 19th 65.00 call being the most actively traded contract (volume is 164 versus open interest of 2,631).
Also rallying to a new all-time high is Ambarella Inc. (AMBA) as shares last traded up $4.74 (or 5.14%) to $96.95 after better-than-expected quarterly earnings last night after the market close. The maker of processing chips for GoPro cameras, wearable devices, drones and other markets posted? Q1 earnings of $0.71 ($0.12 above the $0.59 estimate) on revenue of $71M (better than the $67.4 expected). Multiple analysts upgraded the stock and/or increased price targets with Canaccord Genuity establishing a street-high $115.00 price target. AMBA is up 290% over the past 12 months and up over 34% since May 11th. Calls were outpacing puts 3:2 with the June 5th 90.00 call being the most actively traded contract (volume is 812 versus open interest of 891).?
Today’s Bearish Activity
On the other end of the spectrum is Vera Bradley Inc. (VRA) as shares hit fresh all-time lows after posting disappointing earnings and lowering guidance earlier this morning. For the first quarter the company broke even (vs. expectations for a $0.02 profit) on revenue of $101.1M (below the $105.48M expected). Looking ahead, Vera expects Q2 EPS of $0.10-0.13 on revenue of $116-120M (below the respective $0.17 and $121.M estimates) and full-year 2015 EPS of $0.64-0.74 on revenue of $480-495M (below the $0.84 and $512.67M expected). Shares of VRA last traded down $1.24 (or 8.77%) to $12.90 after trading as low as $12.32 near the open. Puts were outnumbering calls 3:2 with the June 19th 12.00 put being the most actively traded contract (volume is 95 versus open interest of 134).
Volume Signals
Leading today?s list of unusual options volume is Nuance Communications Inc. (NUAN) as total volume is over 15 times its daily average by mid-morning. The top two most active contracts, both of which have volume well above open interest, are the July 19.00 call (volume of 12,421 vs. open interest of 373) and the July 18.00 call (volume is 1,925 vs. open interest of 653). Shares of NUAN are up $0.95 (or 5.66%) to a nine-month high of $17.73 on relatively heavy volume of 2.3M shares (average daily volume is 2M). The stock is up over 25% since last August and appears to be filling a post-earnings gap-down from last August.
The SPDR S&P Biotech ETF (XBI + $2.94 to $241.66) is seeing eight times average daily volume as fairly large 1 x 2 ratio spread was established earlier this morning. A block trader bought 3750 of the July 230.00 puts for $7.80 and simultaneously sold 7500 of the July 210.00 puts for $3.00. This spread could represent bearish positioning or downside protection, but what?s interesting is that XBI is approaching the all-time high ($244.98) the stock hit and subsequently pulled back from back on March 20th. The 210.00 level, which represents the price at which the maximum gain for this position is achieved, is a level where this ETF bounced from back in both late March and in late April.
Also on the radar is American International Group (AIG) as option traders are targeting the at-the-money calls that expire at the end of this week as the stock breaks out to four year highs. Volume on the June 5th 61.00 call is 10,183 versus open interest of 944 (mostly buys at the ask price, ranging from $0.08-$0.35 per contract) while volume on the June 60.50 call is 6,016 versus open interest of 267. AIG last traded up $0.96 to $60.64 after hitting a four-year high of $60.94 earlier in the morning.
Lastly, Yum Brands Inc. (YUM) is getting some attention this morning as volume is currently running at over three times its daily average. The top three contracts being targeted, all of which have volume above open interest, are the June 5th 91.00 call (volume is 4,701 versus open interest of 545), the July 17th 92.50 call (volume is 2,043 vs. open interest of 1,617) and the June 5th 92.50 call (volume is 1,646 vs. open interest of 99). Shares of YUM last traded up $2.19 to $92.06 which is slightly below the all-time high of $95.90 the stock hit back on May 20th.?