Stocks quoted in this article:
Of the 20 equities seeing the heaviest options volume in recent sessions, three names of notable interest this afternoon are Baidu.com, Inc. (ADR) (NASDAQ:BIDU), American International Group Inc (NYSE:AIG), and JPMorgan Chase & Co. (NYSE:JPM). Here is a quick look at today's interesting activity in these options pits.
Calls are the options of choice on Baidu.com, Inc. (ADR) (NASDAQ:BIDU) today, with around 25,000 contracts changing hands, compared to roughly 14,000 puts. However, not all of the day's activity is of the bullish kind. A healthy portion of the 8,007 contracts traded at BIDU's weekly 5/31 100-strike call have gone off at the bid price, and volume is outstripping open interest, hinting at sell-to-open activity. Ideally, BIDU will remain below the psychologically significant century mark through next Friday's close, allowing the options to expire worthless, and the traders to pocket the maximum reward, which is also the initial credit collected. Trade-Alert has indicated the volume-weighted average price (VWAP) for the 5/31 100-strike calls is $0.45. The options market isn't too confident this call will find its way into the money ahead of expiration, with delta currently perched at 0.13, or 13%. This outlook seems to agree with the charts, as BIDU has managed to eke out just one daily close north of $100 since taking an earnings-induced slide in early February. At last check, Baidu was lingering near $94.08.
Considering American International Group Inc (NYSE:AIG) has tacked on a formidable 26.3% in 2013, the equity's option pits have been teeming with bullish activity. This trend is being continued in today's session, where approximately 34,000 calls have crossed the tape, more than double the number of puts that have been exchanged. With American International Group currently trading at $44.64, today's speculators are eyeing a modest move higher through tomorrow's close. More than 4,900 weekly 5/24 44.50-strike calls have been traded for a VWAP of $0.43. A number of these have crossed at the ask price, and only 511 contracts make up open interest, making it safe to assume that a new batch of bullish bets is being initiated. In order for these in-the-money calls to be profitable, AIG must rise above breakeven at $44.93 (strike price plus the VWAP) by the time the closing bell sounds tomorrow evening.
JPMorgan Chase & Co. (NYSE:JPM) option traders are calling a bottom to today's minor pullback. Of the 7,743 contracts traded at the weekly 5/24 53-strike put, more than half have changed hands at the bid price, and volume is exceeding current levels of open interest, suggesting that a portion of the activity is of the sell-to-open variety. By initiating these short puts, traders expect JPM to maintain its perch atop $53 through tomorrow's close -- the stock is currently trading at $53.33. In this best-case scenario, the puts will expire worthless, and the speculators will retain the full potential profit of $0.32 per contract, which is the VWAP. Put writing has been in favor on JPM in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the course of the past 10 sessions, traders on these exchanges have sold to open 98,225 puts, compared to the 70,345 puts that have been bought to open.
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.