Schaeffer's Options Center

Morgan Stanley (MS) gapped higher after reporting earnings on July 21, but has since settled into a pattern of sideways movement. Specifically, MS has been hovering around the $27 level for the past several days, which is coincidentally the home of its 10-week moving average. This trendline has stifled all of the stock's attempts in the past few days, weeks, and months, as MS has not managed a weekly close above it since April 30.

Looking ahead, it seems that traders have bearish expectations for MS. The stock's 10-day International Securities Exchange (ISE) put/call volume ratio of 1.41 reveals that puts bought to open significantly outnumber calls purchased during the past two weeks. This ratio ranks in the 77th percentile of its annual range, indicating that traders on the ISE are initiating bearish bets on MS at a faster pace than usual lately.

Turning to today's activity, the August 27 put has seen volume of 643 contracts change hands -- the majority of which traded at the ask price, revealing they were likely purchased. However, we'll have to wait until Monday to determine whether these at-the-money puts are fresh bearish positions. If these puts were, in fact, bought to open, then it would appear that traders are counting on MS to slip from its newfound perch in the coming weeks.

With just an hour until the close, MS was hovering at breakeven, around $27.00.

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Coinstar, Inc. (CSTR) stepped into the earnings spotlight after the close on Thursday, reporting a second-quarter profit of 41 cents per share on $342.4 million in revenue. Analysts were looking for a profit of 33 cents per share on $381.48 million in revenue. Shareholders did not respond well, as the retailer services stock is currently down some 7.8%, to around $44.30.

Unsurprisingly, puts have been all the rage today, with roughly 6,300 of these bearish bets traded by midday -- eight times the stock's expected single-session put volume of around 762 contracts.

The August 46 strike has been the most popular put today, with 2,073 contracts traded -- 63% at the bid price, revealing they were sold. With CSTR hovering around the $44 level, these puts may have been liquidated by traders taking profit on their positions.

A few strikes lower, the August 44 put has seen volume of 1,137 contracts change hands -- the majority of which traded at the ask price, indicating they were likely purchased. With fewer than 500 contracts currently open at this strike, it seems that at least a portion of these puts are fresh bearish positions.

Elsewhere on the Street, the bears have also made their presence known, as more than 17.7% of the stock's available float is currently tied up in short interest.

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Despite the company's announcement that second-quarter profit more than doubled on solid revenue from Macau, the shares of Wynn Resorts, Limited (WYNN) have ticked lower today, as shareholders apparently aren't impressed with the figures. However, it seems some options speculators are still optimistic toward the casino concern, judging by today's post-earnings activity.

In early afternoon trading, the equity has seen more than 2,600 August 85 calls change hands on open interest of fewer than 2,200, pointing to newly added positions. Plus, more than half of the front-month calls have traded closer to the ask price, hinting at a batch of freshly purchased bullish bets. By buying the August 85 calls to open, the traders are betting the shares of WYNN will stay atop the $85 level through August options expiration.

Meanwhile, a slew of options speculators are likely cheering WYNN's post-earnings trajectory. Ahead of the firm's turn in the earnings spotlight, the stock sported a 10-day International Securities Exchange (ISE) put/call volume ratio of 1.73, implying that traders during the prior two weeks had bought to open more WYNN puts than calls. What's more, this ratio ranks in the 77th annual percentile, suggesting that options players on the ISE were initiating bearish bets over bullish at an accelerated rate.

Further echoing the pessimism plaguing WYNN, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.36 ranks in the 68th annual percentile. In other words, near-term options traders are more skeptically skewed than usual toward the gambling guru.

At last check, the shares of WYNN have surrendered 0.9% to explore the $87 neighborhood.

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Beer behemoth Molson Coors Brewing Company (TAP) will chug into the earnings spotlight on Tuesday, Aug. 3. Ahead of the event, it appears the options crowd is somewhat wary of the stock, with bearish bets being added at an accelerated pace lately.

During the past two weeks, speculators on the International Securities Exchange (ISE) have shown a distinct preference for long puts over calls, as indicated by TAP's 10-day put/call volume ratio of 2.22. What's more, this ratio ranks in the 91st percentile of its annual range, implying that traders on the ISE have bought to open puts over calls at a faster clip only 9% of the time during the past year.

Meanwhile, a plethora of options players on Thursday opted for the pessimistic road less traveled. By the closing bell, TAP had seen nearly 2,300 August 45 calls cross the tape – about eight times its expected daily call activity at any strike. However, 88% of the calls traded at the bid price, and call open interest at the at-the-money strike swelled by almost 2,000 contracts overnight, pointing to sell-to-open activity.

By writing the August 45 calls to open, the sellers are betting the shares of TAP will finish south of the $45 level by the time front-month options expire. In this best-case scenario, the calls will expire without value, allowing the traders to retain the entire credit received at initiation – the most they can possibly gain on the play.

Around midday, the shares of TAP have added 0.2% to hover just shy of the $45 level.

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Insurance issue MetLife, Inc. (MET) reported on Thursday that second-quarter profits rose to $1.56 billion, a huge reversal from its year-ago losses of $1.4 billion. Earnings arrived at $1.23 per share, surpassing the consensus estimate for a profit of $1.00 per share.

Thursday's positive earnings surprise has catapulted MET roughly 3.5% so far today, to $41.64 -- above the troublesome $40 level, which has served as significant resistance to MET in the past several weeks. Prior to this, the $40 level provided support for the stock, and could now resume that role.

Calls have been wildly popular on MET today, with some 4,500 of these bullish bets changing hands so far -- already triple the insurance stock's usual daily call volume of just 1,416 contracts.

Option players have taken note of MET's technical feat, with the September 42 call being the day's most active strike. Roughly 860 contracts have traded on this strike so far today -- 83% at the ask price, suggesting they were likely purchased. Given MET's post-earnings jump, these calls are now out of the money by less than one point.

Despite today's heavy call activity, puts have actually been popular on MET lately. The stock sports a 10-day International Securities Exchange (ISE) put/call volume ratio of 1.60, in the 76th annual percentile. However, in light of Thursday's solid earnings report, these put players may rethink their bearish positions on MET, resulting in a fresh wave of buying pressure for the insurance concern.

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