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 Ford Motor Company (NYSE:F).
Call buying has been a popular strategy in Ford Motor Company's options pits of late. In fact, during the past 50 sessions, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have bought to open nearly seven calls for each put. What's more, the resultant call/put volume ratio of 6.72 ranks in the highest percentile of its annual range, meaning long calls have been initiated over long puts at an annual-high clip in recent months.
Call buyers are at it again in today's session, this time setting their sights on F's July 18 strike. Nearly 11,000 contracts have changed hands here -- easily making it the most active F option this afternoon. The majority of these calls traded at the ask price and implied volatility is higher -- two indications that new positions are being purchased. Additionally, data from the ISE confirms that at least a portion of the day's activity is of the buy-to-open kind.
Based on the volume-weighted average price (VWAP) of $0.06, today's call buyers will profit if F is sitting north of breakeven at $18.06 (strike plus VWAP) at the close on Friday, July 18, when front-month options expire. This mark resides four cents north of the equity's two-year peak tagged in October of last year. Gains for the call buyers will accrue with each additional step north of $18.06 the stock takes, while risk is limited to the initial cash outlay -- should F finish south of the strike price at expiration.
Regardless of the outcome, now is an opportune time to purchase F's front-month options on the cheap. Specifically, the equity's Schaeffer's Volatility Index (SVI) of 16% ranks lower than 87% of similar readings taken in the past year. In other words, premium is inexpensive at the moment, from a volatility perspective.
On the fundamental front, July is poised to be a busy month for the Detroit darling. Next Tuesday, the automaker will release its June sales numbers. Meanwhile, on the morning of Tuesday, July 24, Ford Motor Company (NYSE:F) is slated to reveal its second-quarter earnings report.