After rallying for the past four sessions, the major market indexes closed back in positive territory for 2015. Call options were popular on the day, with the CBOE put/call ratio arriving at 0.66. Among the top 10 most active stocks in the options pits were Twitter Inc (NYSE:TWTR), GoPro Inc (NASDAQ:GPRO) and MannKind Corporation (NASDAQ:MNKD).
Twitter Inc. (TWTR)
Social media guru Twitter attracted a wealth of call activity on Thursday, as traders positioned themselves ahead of the company’s quarterly earnings report. On the day, TWTR stock options volume was triple the daily average, with calls making up 59% of the activity.
If afterhours trading is any indication, TWTR stock bulls will not be disappointed. The shares surged more than 9% in late trading on Thursday, peaking above the $45 level and their 200-day moving average for the first time since October.
Solid quarterly earnings are the driving force, with posting earnings of 14 cents per share on revenue of $479 million. Analysts were expecting earnings of 6 cents per share on revenue of $453.1 million.
GoPro Inc. (GPRO)
While TWTR bulls are set to be rewarded, it looks like GoPro bulls are set to get the horns. With earnings set to arrive after the close, GPRO options volume swelled to more than triple its daily average, with calls accounting for 74% of all contracts traded. Short-term option speculators were out in full force, with the weekly Feb 6 series $55 and $60 strike calls among the most active. These contracts expire at the end of trading today.
While GoPro easily topped Wall Street’s fourth-quarter expectations, the company issued what many considered soft first-quarter guidance of 15 cents to 17 cents per share on sales of $330 million to $340 million. Analysts were expecting a profit of 17 cents per share on revenue of $324.7 million.
Adding salt to the wound, GoPro also announced that Chief Operation Officer Nina Richardson is leaving the company as of Feb. 27.
In afterhours trading, GPRO stock was off more than 15% at $46.05.
MannKind Corporation (MNKD)
Biopharmaceutical company MannKind piqued the interest of options traders on Thursday, with 148,895 contracts changing hands on the session. Additionally, calls where the option of choice, accounting for 61% of yesterday’s volume.
There was a distinct lack of headline news for MannKind yesterday, but the company is set to release its fourth-quarter earnings report sometime within the next two weeks. Expectations are currently set at a loss of 10 cents per share, but guidance could be greatly impacted by the recent announcement that the company’s Afrezza Inhalation Powder, the only inhaled insulin on the market, is now available by prescription in the U.S.
This could be a worrisome situation for MNKD short sellers, who currently hold about 30% of the stock’s total float as short interest. As earnings approach, expect to see more call activity on MNKD stock as short sellers look to hedge their positions against a potential short-squeeze situation.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
