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Most Active Weekly Options: Bank of America Corp (BAC)

Weekly put buyers set their sights on Bank of America Corp

by 10/1/2014 12:11 PM
Stocks quoted in this article:

The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly options volume during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is Bank of America Corp (NYSE:BAC), which has seen a slight uptick in put volume.

Most Active Options Table

Diving right in, Bank of America Corp puts are trading at a slightly faster rate than calls this afternoon. Usually, by this point in the day, call volume more than doubles the number of puts on the tape. What's more, short-term strikes are being targeted, per the stock's 30-day at-the-money (ATM) implied volatility (IV) -- up 3.9% to 23.2%.

BAC's most active option is the ATM weekly 10/3 17-strike put, where 10,283 contracts have been exchanged. Three-quarters have crossed at the ask price, and IV is surging, suggesting the puts are being bought to open. In other words, the traders expect the equity will trend lower through Friday's close, when the weekly options expire, and settle below $17.

Bank of America Corp (NYSE:BAC) is off 0.5% this morning at $16.96. With BAC closing south of the strike price as recently as last Thursday, delta on the aforementioned put is docked at negative 0.55.


Ford Motor Company (F) Trader Bets Big On a Quick Bounce

Ford Motor Company has shed 10% this week amid a number of fundamental woes

by 10/1/2014 11:01 AM
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It's been a terrible week for Ford Motor Company (NYSE:F), with the shares off 10% since last Friday's close to churn near $14.66. Weighing on the stock has been a downwardly revised earnings forecast, a round of bearish brokerage notes, a 3% drop in September sales, and a legal defeat. Option bulls are refusing to throw in the towel on the Detroit darling, though, and today, call volume is running at two times the average intraday pace. Short-term contracts are in high demand, too, per the equity's 30-day at-the-money implied volatility (IV), which is up 1.5% to 26.5% -- in the 94th percentile of its annual range.

Ford's most active option thus far is the October 15 call, where 7,485 contracts have changed hands, due in large part to an early multi-exchange sweep of 6,424 that crossed at an ask price $0.26 apiece, suggesting they were bought. Meanwhile, IV jumped 4 percentage points at the transaction, hinting at the initiation of new positions.

Should Ford Motor Company (NYSE:F) be sitting south of $15 at the close on Friday, Oct. 17, when front-month options expire, the most the speculator stands to lose is the initial cash outlay, or $167,024 (number of contracts * premium paid * 100 shares per contract). However, the options market is pricing in high volatility expectations for Ford over the next several weeks, as evidenced by the equity's Schaeffer's Volatility Index (SVI) of 26%, which ranks higher than 73% of similar readings taken in the past year.


Nokia Corporation (ADR) (NOK) Put Sellers Emerge Ahead of Earnings

Nokia Corporation (ADR) will report quarterly earnings on Thursday, Oct. 23

by 10/1/2014 9:50 AM
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Selling to open puts has been a popular strategy in Nokia Corporation's (ADR) (NYSE:NOK) options pits of late. During the past 10 sessions, in fact, speculators on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have sold to open 2.44 puts for each one they've purchased.

This trend was witnessed on Tuesday, when the majority of the 6,327 puts traded -- representing two times the expected daily amount -- went off at the November 8 strike. Specifically, 5,695 contracts crossed the tape here, 79% at the bid price, suggesting they were sold. Open interest soared overnight, making it safe to assume a fresh batch of short positions was initiated.

By selling to open the puts, speculators expect NOK to maintain its perch atop the $8 mark -- which currently coincides with the stock's 80-day moving average -- through the close on Friday, Nov. 21, when back-month options expire. Drilling down, now appears to be an opportune time to sell premium at this strike, considering its implied volatility is inflated relative to the security's 40-day historical volatility (32% vs. 18.8%). Simply stated, premium is more expensive than usual, from a volatility perspective.

Technically speaking, NOK has added a modest 2.5% this year to trade at $8.31. Meanwhile, the lifetime of the aforementioned puts encompasses the company's third-quarter earnings report -- slated for release on Thursday, Oct. 23. Despite matching or exceeding analysts' bottom-line estimates in each of the past eight quarters, Nokia Corporation (ADR) (NYSE:NOK) has averaged a single-session post-earnings loss of 2.2%, which widens to 3.9% going out one week.


Trina Solar Limited (ADR) (TSL) Bear Bets On a Long-Term Swoon

Trina Solar Limited's (ADR) January 2016 5-strike put was bought to open yesterday

by 10/1/2014 9:37 AM
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Trina Solar Limited (ADR) (NYSE:TSL) saw big moves in September, and yesterday, the equity fell hard -- losing 8.6% to close at $12.07 -- after announcing it will sell roughly 7 million new shares, and offer $100 million in convertible senior notes. In the options pits, put players piled on, sending volume to four times the average daily amount. Amid this accelerated demand, TSL's 30-day at-the-money implied volatility shot 7.1% higher to 61.1%.

Most active was TSL's January 2016 5-strike put, where 5,751 contracts changed hands. The majority of the volume at this LEAPS strike occurred when a block of 4,761 puts was bought to open for $0.47 apiece, resulting in an initial net debit of $223,767 (number of contracts * premium paid * 100 shares per contract). This also represents the maximum risk on the trade, should TSL be sitting above $5 at January 2016 options expiration.

From a wider sentiment perspective, Tuesday's heavy put volume was just more of the same on a stock that's shed nearly 25% year-over-year. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, TSL's 10-day put/call volume ratio of 0.88 ranks higher than all other comparable readings taken in the last 12 months. Simply stated, puts have been bought to open over calls on Trina Solar Limited (ADR) (NYSE:TSL) at an annual-high clip in recent weeks.


Options Check-Up: FireEye Inc, Groupon Inc, and First Solar, Inc.

Analyzing recent option activity on FireEye Inc, Groupon Inc, and First Solar, Inc.

by 10/1/2014 7:55 AM
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Among the stocks attracting attention from options traders lately are online security specialist FireEye Inc (NASDAQ:FEYE), daily deals provider Groupon Inc (NASDAQ:GRPN), and alternative energy concern First Solar, Inc. (NASDAQ:FSLR). Below, we'll break down how options buyers are positioning themselves, and how much speculators are willing to pay for their bets on FEYE, GRPN, and FSLR.

  • Calls have been the options of choice on FEYE lately, according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past 10 sessions, speculators on these three exchanges have bought to open 9.08 calls for every put on FireEye Inc -- a ratio that outranks 88% of other such readings taken over the past year, as traders have favored bullish bets over bearish by a wider margin only 12% of the time. Now is an opportune time to buy short-term options on FEYE, as the equity's Schaeffer's Volatility Index (SVI) arrives at 55%. This reading registers in the 19th percentile of its annual range, indicating front-month option premiums are pricing in fairly low volatility expectations. On the charts, FEYE shares are off 29.9% year-to-date to trade at $30.56.

  • GRPN has become a favorite target among put buyers, as evidenced by the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.75 -- in the bearishly slanted 97th percentile of its 52-week range. Short-term options on Groupon Inc are currently available at bargain prices, from a volatility standpoint; the equity's SVI of 43% stands in the slim 7th annual percentile. Technically speaking, it's been a rough year for GRPN. The shares are down more than 43% in 2014, and they've lately been pinned by resistance in the $7 area. GRPN closed Tuesday at $6.68.

  • Likewise, put options have been popular on FSLR lately. The stock has racked up a 10-day ISE/CBOE/PHLX put/call volume ratio of 0.76, which ranks higher than 90% of other such readings taken over the past year. This preference toward bearishly oriented options is a little surprising, with First Solar, Inc. boasting a market-beating year-to-date gain of 20.4% -- but the stock has been consistently thwarted by resistance in the $75 neighborhood since late March. (After closing Tuesday's session at $65.81, the shares have some room to run before meeting up with this roadblock again.) Meanwhile, front-month options on FSLR are fairly priced, on a volatility basis, with the SVI of 42% arriving in the tame 18th annual percentile.


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