Expect Big Swings From These 3 Tech Stocks

Chris Lau, Kapitall  Trading volatility for technology companies reflects large recent price moves. The wide price swings lead to an increase in the price of options. Below is a list of derivative contracts with expiry dates ranging from March 2013. If the contract price is met, the contract could be exercised, otherwise, they could expire worthless. In the technology space, there are 3 companies worth taking a closer look. [Related articles:  Looking Closely at Cramer’s Technology Buy and Sell Calls​]

1)    Groupon (GRPN)

Screen shot 2013-03-06 at 1.36.46 PM

Volatility for Groupon rose after the company reported quarterly losses, and removed its founder and CEO. Volatility was as high as 85.9% for the Put option expiring on May 18 2013 and trading for $0.10. Shares in Groupon dropped after earnings were released, but gained back 9.6% after the executive departure.

An analyst from Wells Fargo ( WFC) cut the rating in the company, citing weak margins and eventual competition with Amazon.com ( AMZN) as reasons for the downgrade.

The sheer volume of options trading implies that Groupon shares will make wide moves in the weeks ahead. The $4.50 March 16 Put had a volume of 8,669. Groupon closed recently at $5.10, up 12.58% on the day.


2)    NXP Semiconductor (NXPI)

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NXP disclosed in early-February 2013 that Private-Equity (P-E) investors sold 30M shares in the company. KKR reduced its position in the company from 15.9% to 12.8%. Other P-E firms reducing positions included Bain, Silver Lake, and Apax Partners. 

NXP’s March 16 2013 option call exercisable at $30 has a volatility of 41.4%. NXP closed recently at $32.19.
 

3)    Universal Display (PANL)
Screen shot 2013-03-06 at 1.36.05 PM

Options volatility increased for Universal Display following quarterly earnings that were mixed. The company provided revenue guidance for the full year that ranged between $110 million to $125 million for 2013. In the last quarter, research and development spending increased by 34%, to $8 million. The company earned $0.12 per share, missing consensus by $0.01. Revenue increased 51% from last year to $28.1M. Analysts expected revenue to be $1.67M less than actual.

Options volatility ranged from 62% – 66.4%. 

The company traded recently at $32. The $32 call option expiring on March 16 suggests that some investors think Universal Display shares will trade higher in the short-term.

Written by Kapitall contributor Chris Lau

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