Stocks quoted in this article:
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are Apple Inc. (NASDAQ:AAPL), J.C. Penney Company, Inc. (NYSE:JCP), and Cisco Systems, Inc. (NASDAQ:CSCO).
JCP is having another day of volatile price action, after it was revealed that Bill Ackman was selling his shares of the retailer. This move is to the upside, which has call volume trading at more than two times the average intraday pace. Elsewhere, CSCO has failed to rebound following a disappointing reaction to earnings earlier this month, but the speculator who is buying to open a block of September 25 calls today believes that bounce will happen soon. Meanwhile, here is a quick look at the interesting activity in AAPL's options pits.
Although Apple Inc. (NASDAQ:AAPL) finds itself in the red today, calls are outpacing puts by a nearly 2-to-1 margin. Amid the increased demand for short-term AAPL options, the stock's 30-day, in-the-money implied volatility has jumped 8%, or 2.2 percentage points, to 29.8%. AAPL's weekly 8/30 500-strike call has emerged as the most sought-after position, where 21,731 contracts have changed hands for a volume-weighted average price (VWAP) of $4.22. This near-the-money strike has seen activity on both the ask and the bid side, implied volatility has ticked higher, and volume is outstripping open interest. Summing it all up -- and confirmed by data from the International Securities Exchange (ISE) -- there appears to be a mix of buy- and sell-to-open activity happening here, respectively.
By purchasing the calls, the traders will begin to profit with each step above $504.22 (strike plus the VWAP) AAPL takes through week's end, which is when these short-term options expire. This breakeven mark sits roughly 2.4% above the stock's current perch at $492.35. Should Apple fail to move north of the strike price over the next several sessions, the most the call buyers have risked is the initial premium paid.
Meanwhile, by selling to open the calls, the speculators are banking on the round-number $500 mark to prove its might as resistance through Friday's close. In this best-case scenario, the calls will expire worthless, and the traders can retain the net credit collected as their full potential reward on the play. With AAPL already down 1.7% this week, this could also represent shareholders using covered calls to provide a cushion against any additional downside the stock may see in the near term.