Schaeffer's Trading Floor Blog
Stocks quoted in this article:
Options Check-Up: Bank of America Corp, Barrick Gold Corporation (USA), and Ciena Corporation Sub: Analyzing recent option activity for BAC, ABX, and CIEN Keywords: Bank of America Corp, BAC, Barrick Gold Corporation USA, ABX, Ciena Corporation, CIEN Tickers: BAC, ABX, CIEN

Among the stocks attracting attention from options traders lately are financial kingpin Bank of America Corp (NYSE:BAC), gold miner Barrick Gold Corporation (USA) (NYSE:ABX), and networking equipment provider Ciena Corporation (NYSE:CIEN). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on BAC, ABX, and CIEN.

  • Although BAC has lost 15.4% since hitting its March 21 multi-year high of $18.03 to trade at $15.26, speculators have bought to open more than four times as many calls as puts during the past 10 weeks. What's more, the resulting 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 4.32 ranks in the 83rd annual percentile, indicating a heavier-than-usual demand for bullish bets over bearish of late. Option traders purchasing short-term contracts on Bank of America Corp are doing so at a discount (from a volatility standpoint), as demonstrated by the equity's Schaeffer's Volatility Index (SVI) of 18%, which ranks in the bottom 18% of its 12-month range.

  • Likewise, ABX has shed more than 22% over the last three months to trade at $15.90, but has still seen a near-annual-high rate of call buying, relative to put buying, in its options pits during the past 10 weeks. This is evidenced by the stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 5.68, which ranks just 10 percentage points from a 12-month peak. Currently, the equity's SVI of 27% ranks lower than 97% of comparable readings from the past year, meaning speculators can buy short-term contracts on Barrick Gold Corporation (USA) at a relatively inexpensive price.

  • Finally, CIEN dropped 3.9% today to close at $18.65, and is now sitting more than 22% lower year-to-date. Nevertheless, the equity's 50-day ISE/CBOE/PHLX call/put volume ratio of 4.84 ranks in the 69th annual percentile, indicating speculators have been scooping up long calls over puts at an accelerated clip, ahead of the company's fiscal second-quarter earnings report Thursday morning. Meanwhile, the stock's SVI of 56% ranks in the 42nd percentile of its 12-month range, meaning short-term options on Ciena Corporation are still slightly less expensive than usual, relatively speaking.
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