Stocks quoted in this article:
Momentum names that made notable moves on Tuesday and could continue to do so into Wednesday's session include global software provider Pitney Bowes Inc. (NYSE:PBI), airline operator American Airlines Group Inc (NASDAQ:AAL), and science-and-technology conglomerate The Dow Chemical Company (NYSE:DOW). Here is a quick look at these stocks ahead of tomorrow's opening bell.
Pitney Bowes Inc. (NYSE:PBI)
Pitney Bowes hit a five-year high of $27.63 today, after the company announced this morning it has received an award from Omega Management Group Corp. for the third consecutive year, in recognition of its excellent customer service. In response, call players flooded PBI's options pits, snatching up more than 12 times the average daily amount of contracts. In fact, by the end of the session, PBI calls outnumbered puts by a nearly 33-to-1 margin. Considering short interest represents close to 11 sessions' worth of pent-up buying demand (at the shares' average daily volume) it is possible some of this heavy call activity came at the hands of short sellers hedging against additional upside on PBI, which closed 1.7% higher at $27.55. It is also worth noting that an extension of the stock's upward trajectory may cause some short-covering activity, which could give the shares an extra boost.
American Airlines Group Inc (NASDAQ:AAL)
American Airlines finished the session 0.6% higher at $39.35, after earlier notching a fresh all-time high of $39.93. Nevertheless, puts traded at more than two times the average daily rate, outpacing calls by a margin of more than 3-to-2. Nearly half of today's puts appear to have been bought to open as a 7,030-contract block at the August 38 strike, meaning one speculator is betting on AAL backpedaling below $38 by August options expiration. Looking back over the past month paints a different picture of AAL's options pits, as the equity sports a 20-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 5.49, with more than five calls bought to open for every put during this time period.
The Dow Chemical Company (NYSE:DOW)
Finally, Dow Chemical ran to a new nine-year peak at $51.28 this morning, before settling with a 0.5% gain at $50.93 at the closing bell. While DOW calls roughly tripled puts in today's options pits, stepping back two weeks shows that puts have actually been the contracts of choice recently. DOW's 10-day ISE/CBOE/PHLX put/call volume ratio of 1.12 ranks in the 90th percentile of its 12-month range, demonstrating a near-extreme rate of put buying, relative to call buying, of late. Not to mention, the equity's Schaeffer's put/call open interest ratio (SOIR) stands at a 52-week peak of 0.98, which means short-term option traders are more put-heavy now toward DOW than they have been at any other time during the past year.