Schaeffer's Trading Floor Blog
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are chip maker Advanced Micro Devices, Inc. (NYSE:AMD), mine operator Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), and oil-and-gas company Chesapeake Energy Corporation (NYSE:CHK). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on AMD, FCX, and CHK.

  • AMD's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 15.31 demonstrates more than 15 calls have been bought to open for every put during the past two weeks. What's more, this reading ranks in the top 6% of its 12-month range, meaning the recent rate of call buying, relative to put buying, is at a near-annual-high level. Given that Advanced Micro Devices, Inc. has been consolidating around the $4 level for the last month -- and 18% of the stock's float is sold short, which represents 6.5 sessions' worth of pent-up buying power, at average daily volumes -- it is possible that some of the recent call buyers are actually short sellers in disguise, picking up "insurance" against potential upside. Now is an opportune time to purchase front-month options on AMD, which is perched at $4.06. The stock's Schaeffer's Volatility Index (SVI) of 33% ranks just 6 percentage points from an annual low, indicating these contracts are relatively inexpensive right now.

  • Bullish speculators have made their way to FCX's options pits in recent sessions. The equity's 10-day ISE/CBOE/PHLX call/put volume ratio of 2.97 ranks in the 78th annual percentile, demonstrating FCX calls have been bought to open over puts at an accelerated clip of late. Like AMD, FCX's front-month options are cheaper than usual (from a volatility perspective), as the stock's SVI of 19% ranks lower than 96% of comparable readings from the past year. On the charts, meanwhile, Freeport-McMoRan Copper & Gold Inc. shares are up 15% from their March 13 year-to-date low of $30.38 to linger near $34.93.

  • On the other hand, CHK -- which is up 9.5% year-to-date to perch at $29.72 -- has seen an acceleration in bearish betting (compared to bullish) in its options pits during the past two weeks. This is evidenced by the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.88, which ranks in the 73rd percentile of its 12-month range. Furthermore, Chesapeake Energy Corporation's SVI of 29% ranks in the 37th annual percentile, indicating the equity's front-month options are attractively priced right now. Looking ahead, CHK is slated to host its annual shareholder meeting next Friday.

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