Stocks quoted in this article:
Option Brief: EMC Corporation (NYSE:EMC) is off 4% to $24.23 today after a disappointing showing in the earnings confessional this morning. The negative price action dropped the stock below the historically supportive $24.50 level. Since mid-July, in fact, the shares have not closed beneath this mark once. Accordingly, in EMC's options pits, it appears a group of traders is anticipating a near-term rebound.
In view today is the IT name's weekly 10/25 24.50-strike call, where north of 6,300 contracts have traded. The majority of the transactions occurred on the ask side, and volume easily outstrips open interest at the strike, together suggesting buy-to-open activity. This theory is confirmed in part by data from the International Securities Exchange (ISE). In other words, the call buyers are anticipating EMC will topple the strike price between now and the end of the week, when the options expire. Even if it doesn't, the most the speculators can lose is the initial premium paid.
The aforementioned calls are just one of several strikes attracting notable attention today -- not surprising, given that total volume on EMC Corporation (NYSE:EMC) options stands at roughly 77,000, or more than four times the usual intraday amount. Also, with no more uncertainty surrounding the company's third-quarter earnings results, short-term options have gotten cheaper. At last check, EMC's 30-day, at-the-money implied volatility had shed 7.1 percentage points, or 25.8%, to 20.5%.