Top 3 Stocks With Unusual Put Activities On Tuesday

Includes: DG, S, TXN
by: Nick Chiu

The stock rallied on Tuesday, where Dow Jones gained 0.60%, S&P 500 gained 0.65%, and NASDAQ gained 1.2%. DIA, SPY, and QQQ all managed to close above its 50-day moving average now. 11 sectors gained on Tuesday, with the technology sector leading the gain with 1.31%. Transportation is the only down sector with a 0.08% loss.

For NYSE, 2,069 stocks advanced, 978 declined, and 107 stayed neutral. For NASDAQ, 1,762 stocks advanced, 713 declined, and 117 stay unchanged. In this article, the top 3 stocks with unusual put activities on Tuesday were identified and will be presented for investors / traders to research further.

Name (Ticker)

Put Volume

Average Put Volume

Daily Volume Ratio

Dollar General Corp (NYSE:DG)




Sprint Nextel Corporation (NYSE:S)




Texas Instruments Incorporation (NYSE:TXN)




Source: Schaeffer's Research

Dollar General Corp.

On Tuesday, DG declined 7.79% after releasing its Q3, 2012 sales and earnings. Third quarter same-store sales increased 4.0%, and total sales improved 10.3%. Operating profit increased 16% to 9.1% of sales, a new third quarter record. Adjusted EPS grew 26% to $0.63 per diluted share. The Company updated its outlook for 2012 adjusted EPS to a range of $2.82 to $2.85. However, investors grew cautious after the release of the following statement, as quoted:

"Although our performance over the Thanksgiving weekend and start of the holiday season has been encouraging, we continue to be cautious for the remainder of the year. We are facing a significant same-store sales comparison from our 2011 fourth quarter, which included very strong January sales, growing near-term pressures that are impacting our customers' confidence and spending, and a challenging competitive environment. Dollar General is keenly focused on our ability to capture market share, build and maintain customer loyalty and deliver strong financial returns that support our sustainable growth for the long term."

The volume for Dec. 21, 2012 put with the strike price of $43.00 and $44.00 surged to 11,289 and 12,816, with the implied volatility of 23.4 and 24.1. The chance of break-even for $43.00 and $44.00 put are 35.75 and 43.84. The historical volatility for DG is 35.61 for 1 month, 26.04 for 3 months, and 21.7 for 1 year.

Sprint Nextel Corporation

S closed at $5.57 with a decline of 1.59% on Tuesday. The volume of 50.32M is 52.76% more than a 30 day average volume of 32.94M. As seen from the chart below, S is approaching its 50-day moving average of $5.55. The MACD (12, 26, 9) is showing a bearish sign and the MACD difference diverged. The momentum indicator, RSI (14), is breaking below 50 at 46.02, indicating increasing selling momentum. As seen from the chart below, if S breaks down below its 50-day MA, the next support will be at $5.31, the S2 pivot point.


The most active puts were Feb. 15, 2013 puts with a strike price of $4.5 and $5.5. The volume for $4.5 and $5.5 were 10,720 and 10, 345 with an open interest of 12,199 and 40,509 respectively. The implied volatility for $4.5 and $5.5 are 39.1 and 19.9. The chance of breakeven for $4.5 and $5.5 are 10.67 and 32.94. The historical volatility for S is 14.2 for 1 month, 42.04 for 3 months, and 50.73 for 1 year.

Texas Instruments Incorporation

TXN narrowed its Q4 forecast on Monday, with lower earnings expectations due to restricting costs. TXN now expects to earn 5 to 9 cents per share for the period that ends Dec. 31, which is lower than the prior forecast of 23 to 31 cents per share. The forecast now includes charges of 21 cents per share associated with its previously announced plan to restructure its wireless segment. Analysts polled by FactSet expect the company to earn 6 cents per share, including one-time charges, on revenue of $2.95 billion.

As CNBC reported, "Texas Instruments is shifting the focus of its wireless investments to industrial and automotive customers and away from smartphones and tablets, where the company's biggest customers are developing their own custom chips instead of doing business with companies like Texas Instruments. Texas Instruments says the changes require fewer resources and less spending." The Q4, 2012 revenue guidance is in line with analysts' estimates.

TXN surged and closed at $31.01 with a 3.99% gain on Tuesday. The volume of 16.77M is 93.87% more than 30-day average volume of 8.65M. TXN is currently trading above its 200-day MA of $29.26 and 50-day MA of $28.69. The RSI (14) is also picking up at 68.54 with an increasing buying momentum. The MACD (12, 26, 9) is also showing a bullish sign, as seen from the chart below.


The most active puts were Dec. 13, 2012 put with the strike price of $30.00, with the volume of 7,010 and an open interest of 279. The implied volatility is 26.0, and the chance of breakeven is 10.42. Dec. 21, 2012 put with the strike price of $30.00 had the second largest volume. 5,967 put contracts were exchanged with an open interest of 2,462. The implied volatility is 24.4, and the chance of breakeven is 18.73. The historical volatility for TXN is 21.5 for 1 month, 25.26 for 3 months, and 31.26 for 1 year.

Note: All numbers/prices are quoted from the closing of December 11, 2012 with the data provided from Barron's, MorningStar, Schaeffer's Investment Research, Inc., Google Finance, and Yahoo! Finance. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Problem with this article? Please tell us. Disagree with this article? .