Paper bought 1,980 FIO Sep 18 Calls for $0.60 (5.9 times usual volume) with stock at $13.24
Paper bought 12,535 AU Jun 28 Calls for $0.05 (10.8 times usual volume) with $18.79
Paper bought 2,000 WFM Jun 105 Calls for $1.95 (4.7 times usual volume) with stock at $102.19
Paper bought 5,600 SMH Jun 40 Calls for $0.30 (4.4 times usual volume) with stock at $38.32
Paper bought 850 DIS Jun 65 Calls for $1.69 (2.3 times usual volume) with stock at $65.02

Seadrill Limited is a subaquatic drilling company headquartered in Bermuda and managed from Norway.  Seadrill and its subsidiaries have a range of operation that extends from the North Atlantic Basin to the South Pacific.  Seadrill is becoming the operator of choice for many of the large oil producing companies, and is continuing to aggressively expand to take advantage of the growing offshore drilling market.  This ambition is paying off, for the time being.  The company’s stock is considered a risky investment by many analysts because it is, due to extensive leveraging, very vulnerable to changes in the oil market.  On the other hand, they have a relatively new (and expanding) stock of rigs and a streamlined business model that is handily outstripping competitors in their field.

My Trade:  Buying the SDRL June 41 Calls for $.65

Risk: $65 per 1 lot

Reward: Unlimited

Breakeven: $41.65

Greeks of the Trade:

Delta: Long

Gamma: Long

Theta: Short

Vega: Long

Game developer and distributor, Electronics Arts Inc. (NASDAQ: EA) saw its stock rise by 14.5% on May 8 in anticipation for earnings reports. The company is forecasting higher earnings than most analysts after boasting its lower operating costs and more focused investments for 2014.  EA saw digital revenue increase by 45% compared to the previous year. The new mobile market brought in a total of $618 million and is expected to grow along with higher sales of smartphones and tablets. EA also announced a licensing deal with The Walt Disney Company to develop and publish games for the new Star Wars series. The multi-year deal encompasses various platforms and is expected to revive EA’s profitable partnership division. 

Zillow (Z) released earnings yesterday, reporting higher than expected revenue, but still lost eleven cents per share.  The pre-earnings hype centered around the expected sales growth, which was significant, but Zillow’s ballooning sales and marketing costs effectively offset sales revenues.  The company is growth-oriented and forward thinking as compared to its closest competitors, but traders worry that Zillow may have put the cart before the horse in their pursuit of a rapid and expensive marketing expansion.

Brady Randall

Bradyr@keeneonthemarket.com