Options Activity for Gannett (GCI), Citrix Systems (CTXS) and Xerox (XRX)
Tuesday, October 12, 2010



I hope that your trading is going well, as I know that members of S.O.M.E. are making the most of the market movements and their returns.



Today's newsletter includes a look at a rise in put trading on Gannett (GCI), while options activity was also brisk on Citrix Systems (CTXS) and Xerox (XRX). The purpose of this newsletter is to focus on stocks seeing heavy options trading and gives you a unique insight into each stock's sentiment backdrop.

Citrix Systems (CTXS)

Citrix Systems Inc. (CTXS) shares dropped on Monday on fears that September bookings may miss expectations after a sterling second quarter. Credit Suisse projected a sequential decline in XenDesktop bookings and license revenue. Meanwhile, a Mizuho Securities analyst said the Street has ignored prior warnings that bookings would slow. The security also saw residual pressure from last week's sell-off in the data-center space after the revenue warning from Equinix (EQIX).

Options players jumped on the shares of CTXS on Monday, as more than 42,600 contracts crossed the tape. This surge in volume was more than three times the stock's average daily trading volume of 14,112 contracts, according to data from WhatsTrading.com. Options activity was evenly split between puts and calls.



Options players jumped on the shares of CTXS on Monday, as more than 42,600 contracts crossed the tape. This surge in volume was more than three times the stock's average daily trading volume of 14,112 contracts, according to data from WhatsTrading.com. Options activity was evenly split between puts and calls.

Meanwhile, the International Securities Exchange (ISE) has seen a slight increase in put trading. During the past 10 trading sessions, approximately 0.86 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 63% of all those taken during the past year.

Furthermore, the put/call open interest ratio (SOIR) comes in at 0.80, which is higher than 58% of all those taken during the past year. In other words, short-term options players have been more pessimistically aligned toward the shares 42% of the time during the past 12 months, pointing to a slight pessimistic leaning among options players.

Wall Street also has its doubts about the company. According to Zacks, the stock has earned 11 "buy" ratings, 16 "holds," and two "sells." Any upgrades from this group could add some buying pressure to the shares.

Technically speaking, the shares of CTXS are up more than 33% since the beginning of the year. However, the stock has dropped sharply in the last week, and the shares have fallen below support at their 10-day and 20-day moving averages.



Gannett (GCI)

Gannett Co. Inc. (GCI) was the center of some heavy options trading on Monday, as more than 35,600 contracts crossed the tape. This surge in volume was more than nine times the stock's average daily trading volume of 3,794 contracts, according to data from WhatsTrading.com. In addition, traders were feeling rather bearish, as 89% of the volume changed hands on the put side.



On the other hand, the ISE has seen a surge in call trading. During the past two trading weeks, more than 28 calls have been purchased to open for every one put purchased to open. This ratio of calls to puts is higher than 99.5% of all those taken during the past 12 months, pointing to a rising optimism.

However, there is still ample room for optimism to grow toward the shares. The SOIR for GCI comes in at 0.95, as put open interest nearly equals call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 70% of all those taken during the past year. In other words, short-term options players have been more pessimistically aligned toward the shares only 30% of the time during the past 12 months.

Elsewhere, we find that short interest is on the rise. During the past month, the number of GCI shares sold short increased by 5% to 34 million. This accumulation of bearish bets is more than nine times the stock's average daily trading volume and accounts for 14% of the company's total float.

From a technical perspective, the shares of GCI are down more than 7% since the beginning of the year. Since reaching a peak near 19.50 in April, the stock has been guided lower by resistance at its 10-week and 20-week moving averages.



Xerox (XRX)

Options players flocked to the shares of Xerox Corp. (XRX) on Monday, as more than 96,000 contracts crossed the tape. This jump in volume was more than seven times the stock's average daily trading volume of 13,508 contracts, according to data from WhatsTrading.com. Furthermore, approximately 52% of the volume changed hands on the call side.



On the other hand, puts have been a growing favorite recently. The ISE's 10-day put/call volume ratio comes in at 0.60, which is higher than 74% of all those taken during the past 12 months, indicating a growing preference for puts.

What's more, the SOIR for XRX comes in at 0.82, which is a peak in pessimism for the shares. In other words, short-term options players have not been more pessimistically aligned toward the shares at any other time during the past 12 months.

Despite the growing pessimism among options players, Wall Street remains relatively optimistic. According to Zacks, the stock has earned six "buy" ratings and four "holds."

Technically speaking, the shares of XRX are up more than 30% since the beginning of the year. The equity has recently climbed back from support in the 8 region and rallied above former support at its 10-week and 20-week moving averages.





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