Option Skews - Relatively Heavy Call Activity on Savient Pharmaceuticals Inc and Wells Fargo & Co

Here are the stocks that saw a bias toward call activity in the previous session. 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.

Companies included in today's scan results: Citigroup Inc (C), General Electric (GE), IBM (IBM), Apple Inc (AAPL), Weatherford International (WFT), XTO Energy (XTO), Intel Corp. (INTC), International Paper (IP), Goldman Sachs Group (GS), Valero Energy (VLO), BP p.l.c. (BP), Savient Pharmaceuticals Inc (SVNT), Baidu Inc. (BIDU), Research in Motion Limited (RIMM), Seagate Technology (STX), Wells Fargo & Co (WFC), Wal-Mart Stores Inc (WMT), Baxter International (BAX), Sears Holdings Corp (SHLD), Gamestop Corp (GME), Microsoft Corp (MSFT), DIAMONDS Trust Series I (DIA), Pfizer (PFE), El Paso Corp. (EP), E-Trade Financial Corp (ETFC).

Savient Pharmaceuticals Inc and Wells Fargo & Co are the charts that stood out to me -

• All it takes is a quick glance at the daily chart of Savient Pharmaceuticals to see that this is quite the roller coaster ride. A couple of massive gaps in June have been followed by a wide range. Overall, the sideways back-and-forth has allowed the stock to consolidate the mid-year gains but this is clearly not a stock for the faint of heart. According to data collected by our Quantified Analysis department, 18% of the stock's float is sold short. That is important for two reasons. First, it may exacerbate volatility and help explain the action seen in the daily chart. Secondly, short sellers may buy calls to hedge, leading to some of the activity shown in the table below.
• Shares of Wells Fargo & Co have pushed above the resistance I have been noting. The stock is now pulling back to retest that zone as potential support. Earnings are scheduled to be out next Wednesday.

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