Schaeffer's Trading Floor Blog

Options Check-Up: QUALCOMM, Inc., Citigroup Inc, and Bank of America Corp

Analyzing recent option activity for QCOM, C, and BAC

by 3/13/2014 5:51 PM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are digital communications expert QUALCOMM, Inc. (NASDAQ:QCOM), plus prominent financial firms Citigroup Inc (NYSE:C) and Bank of America Corp (NYSE:BAC). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on QCOM, C, and BAC.

  • Though QCOM reached a 14-year high of $77.20 on Tuesday, the stock has spend most of the past month churning between $75 and $77, allowing for doubt to grow in options players' minds. During the past 10 trading days, the equity has racked up an International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 0.63, which ranks in the 78th annual percentile. In other words, long put activity on QCOM (compared to long call activity) has accelerated during the past two weeks. Now is an opportune time to purchase short-term options on QUALCOMM, Inc., which is currently perched at $75.63. The stock's Schaeffer's Volatility Index (SVI) of 13% ranks in the bottom 5% of its 12-month range, indicating prices on these contracts are nearing annual-low-levels, from a volatility standpoint.

  • Activity in C's options pits has been bullishly slanted of late, with the stock's 10-day ISE/CBOE/PHLX call/put volume ratio coming in at 2.37. The current reading ranks in the 70th annual percentile, highlighting the heavier-than-usual demand for long calls over long puts throughout the past two weeks. Though Citigroup Inc has shed 9.2% year-to-date to trade at $47.33, at least its short-term option buyers can rest assured knowing they got a relatively good deal on their bets. The equity's SVI of 22% ranks lower than 73% of comparable readings from the past year.

  • BAC calls have been bought to open over puts at a near-annual-high rate recently, as evidenced by the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 5.13, which ranks 6 percentage points from a 12-month peak. This makes sense, considering the shares have climbed more than 10% since the start of the year to perch at $17.16. Plus, SVI for Bank of America Corp stands at 23%, which ranks in the 29th annual percentile -- indicating front-month options are reasonably priced right now, relatively speaking.

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