Stocks quoted in this article:
The 20 stocks listed in the table below 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 this afternoon is eBay Inc (NASDAQ:EBAY). Falling off the list since last time were Salesforce.com, inc. (NYSE:CRM) and Sprint Corporation (NYSE:S).
eBay Inc calls are trading at a slight uptick to the intraday average today, and are outpacing puts by a margin of more than 2-to-1. Diving deeper, it appears a number of speculators are betting on the stock to take a sharp bounce from round-number support over the next several weeks, and are targeting EBAY's June 50 call.
At last check, 5,810 contracts have traded at this at-the-money strike -- including a multi-exchange sweep of 2,564 -- and the majority have crossed on the ask side, hinting at buyer-driven activity. Implied volatility has ticked higher, and volume outstrips open interest, making it safe to assume that new positions are being initiated. In order for these call buyers to profit at expiration, EBAY must be sitting above breakeven at $51.11 (strike plus the volume-weighted average price of $1.11), with profit rising with each additional step north the stock takes.
On the charts, EBAY has put in a dreary performance in recent months, with the shares off more than 16% from their Feb. 28 record peak of $59.70 to trade at $50.08. However, this pullback is being contained near the $50 area (today's intraday low was $50.05), suggesting the equity has once again found technical support atop this round-number mark. Looking back, this level has acted as a floor for EBAY since late 2012. Should the stock fail to maintain a foothold above $50, and finish south of the strike price at the close on Friday, June 20 -- when front-month options expire -- the speculators stand to lose 100% of the premium paid.
Based on the stock's Schaeffer's Volatility Index (SVI) of 19%, which ranks lower than 96% of similar readings taken in the past month, this is a relatively modest sum. Specifically, this metric indicates that premium on eBay Inc's (NASDAQ:EBAY) front-month options is inexpensive, from a volatility perspective.