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Bulls Have High Hopes for American International Group Inc (AIG)

Calls are in heavy rotation on outperforming AIG shares

by 5/16/2013 1:46 PM
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Traders have taken a strong interest in call options on American International Group Inc (NYSE:AIG) lately, according to data from the major options exchanges. During the past five sessions, speculators on the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE) have bought to open 27,401 calls on AIG, compared to just 10,849 puts -- yielding a top-heavy call/put volume ratio of 2.53.

From a broader view, AIG has racked up a 10-day call/put volume ratio of 3.56 on the ISE, CBOE, and NASDAQ OMX PHLX (PHLX). In other words, options players have purchased more than three calls for every put on AIG shares during the past couple of weeks. This ratio ranks higher than 78% of other such readings taken within the previous year, which means traders have been buying calls over puts at a faster-than-usual pace lately.

Earlier this week, AIG saw a relatively rare influx of call-selling activity, but premium sellers have more recently shown a preference for puts. Over the past 10 days, speculative players on the ISE, CBOE, and PHLX have sold to open 1.28 times more AIG puts than they've purchased, confirming the bullish bias evidenced by the simultaneous rush toward long calls.

After checking out the charts, it's not difficult to see why options traders are feeling upbeat toward American International Group Inc (NYSE:AIG). The stock has vaulted to a gain of nearly 29% so far in 2013, and is currently trading at $45.46. Earlier this month, AIG spent some time consolidating in a sideways pattern following an earnings-related bull gap, but resumed its march higher after meeting back up with support at its rising 10-day moving average. Along with its 50-day and 80-day counterparts, this trendline has guided the stock higher since December.


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