Stocks quoted in this article:
General Electric Co (GE), Hartford Financial Services (HIG), and Seagate Technology (STX) were among the stocks showing a call skew in Monday's trading.
Shares of General Electric, once considered among the upper echelon of blue-chip names, dropped 10% as they hit another new annual low. This came amid chatter of a dividend cut and overall woes. However, the response from option buyers on the ISE was to plow into calls. The daily chart shows the stock is oversold but there have been no signs yet of the downtrend slowing.
Hartford Financial Services is no stranger to the call skews list. As discussed a couple of weeks ago, this is volatile name and the action has tended to attract call buyers. A look to the
intraday chart though shows little in the way of strength recently. The shares have crept back toward their annual low and are oversold so it may be that some are anticipating a bounce.
The uptick in enthusiasm for Seagate Technology comes at a peculiar time. The stock dropped 14% Monday and has shown little signs of life since entering a sideways range four months ago. On a short-term basis, the shares do have some room to run before then encounter resistance at the top of the range. However, the intermediate-term view is still weak.
This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's call volume on the ISE is at least twice as great as the put volume. It then sorts the stocks based on the call volume. Since this is buy-to-open data, this can be a good source for finding stocks where optimism is emerging. Of particular interest to me would be situations where we see call activity on stocks that are still in intermediate-term downtrends. This would be a potentially cautionary sign from the contrarian perspective
Other companies seeing a skew towards calls in the previous session: Bank of America (BAC), Expeditors International of Washington (EXPD), SPDR Gold Trust (GLD), UnitedHealth Group Inc (UNH), Freeport-McMoRan Copper & Gold Inc (FCX), Capital One Financial (COF), Intel Corp. (INTC), Genentech Inc (DNA), Cleveland-Cliffs (CLF), Target Corp. (TGT), Chesapeake Energy Corp (CHK), Genzyme General (GENZ), DryShips Inc. (DRYS), Corning Incorporated (GLW), Simon Property Group (SPG), Alcoa (AA), Hewlett-Packard (HPQ), Johnson & Johnson (JNJ), Hologic (HOLX), Pfizer (PFE), Petroleo Brasileiro SA (PBR), American International Group (AIG).