Stocks quoted in this article:
The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is 3D Systems Corporation (NYSE:DDD), which has been heavily targeted by put buyers ahead of earnings.
3D Systems Corporation (NYSE:DDD) is 4.8% higher at $54.51, erasing yesterday's losses stemming from Amazon.com, Inc.'s (NASDAQ:AMZN) foray into the 3-D printing market. DDD may be rallying amid reports that RBC Capital expects the company to upwardly revise its earnings guidance Thursday morning, when it's scheduled to unveil its second-quarter figures. Historically, the firm has matched or exceeded the Street's per-share profit projections in six of the past seven quarters, resulting in an average one-week post-earnings gain of 5% for DDD shares.
Despite its impressive earnings reactions, DDD is attracting bearish options bettors today. Specifically, the stock's deep out-of-the-money August 48 put is by far the most active option, with more than 2,200 contracts exchanged. The majority of the puts crossed on the ask side, and implied volatility is trending higher, hinting at new positions. Underscoring this theory, volume has surpassed open interest at the front-month strike.
The volume-weighted average price (VWAP) of the puts is $0.97, meaning the buyers will reap a reward if DDD is docked south of $47.03 (strike minus VWAP) -- in territory not charted since early May -- at the close on Friday, Aug. 15, when the options expire. The buyers' profit will increase as DDD sinks below breakeven, while risk is capped at the initial premium paid for the puts, should the shares remain atop the strike through the option's lifetime.
On the charts, today's rebound has DDD on pace to finish atop its 10-day moving average for just the second time since July 7. From a longer-term perspective, however, 3D Systems Corporation (NYSE:DDD) has shed more than 40% in 2014. Should the shares extend their retreat after earnings, losses could be exacerbated by a round of bearish brokerage notes. Currently, DDD boasts 10 "buy" or better endorsements, compared to three "holds" and two "sell" or worse ratings.