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Long-Term Speculators Swarm A123 Systems

Call activity has rocketed higher as AONE breaks out

by 6/12/2012 2:22 PM
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Speculation is heating up today on A123 Systems, Inc. (AONE - 1.47), with roughly 37,000 calls and 7,320 puts changing hands so far. This is a huge volume spike for the stock, which sees just 200 calls and 348 puts cross the tape on an average day.

Today's crop of options players are taking a long-term approach with AONE, as the most popular strike is the January 2013 1.50 call. At last check, 12,748 contracts have traded at this strike, with a slim majority crossing closer to the bid price -- suggesting they were sold. This LEAPS strike currently carries open interest of just 854 contracts, indicating that new positions are being added here today.

Not far behind is AONE's September 1.50 call, where 12,074 contracts have been exchanged. Again, most of these calls have traded near the bid price, and today's volume is easily outstripping open interest of 154 contracts.

This sudden interest in AONE calls is a change of pace for the battery specialist. During the past 10 sessions, the stock has racked up a put/call volume ratio of 2.43 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 98% of other such readings taken over the previous year, implying that speculative investors have been purchasing puts over calls at a near-annual-high pace in recent weeks.

Low-priced AONE shares have vaulted nearly 41% higher today, bolstered by the company's announcement of a "game-changing breakthrough" in automotive batteries. As a result, the stock could be on pace to collect a weekly close above its 20-week moving average for the first time since February 2011.

Weekly Chart of AONE since February 2011 With 20-Week Moving Average


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