Stocks quoted in this article:
The 20 stocks listed in the table below have attracted the highest options volume during the past 10 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 Ford Motor Company (NYSE:F), which is seeing accelerated option activity on the put side of the fence.
Ford Motor Company traders have shown a preference for short-term puts, per the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.74, which ranks in the 95th percentile of its annual range. However, this metric measures both buy- and sell-to-open activity, and according to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have been evenly divided. Specifically, over the past 50 sessions, traders have sold to open roughly as many puts as they've purchased.
In today's trading, puts are crossing the tape at a rate two times the intraday average. While the most active option is F's January 2015 18-strike call, it appears one speculator may be closing out of a long strangle that was previously initiated in conjunction with the stock's January 2015 16-strike put.
Looking further down F's most active options chain, there appears to be some buy-to-open activity occurring at the equity's November 16 put, where 5,001 contracts have traded for a volume-weighted average price (VWAP) of $0.30. At-expiration breakeven for those purchasing the puts is $15.70 (strike less VWAP), with profit accumulating on a move down to zero. Losses, however, are limited to the initial premium paid, should F settle north of the strike at the close on Friday, Nov. 21, when the options expire.
Put writers, meanwhile, are also targeting F's November series; specifically, the 15 strike. By selling to open these options, the traders expect the security to maintain its perch atop $15 throughout option's lifetime. In this best-case scenario, the puts will expire worthless, and the speculators can pocket the initial credit received as their full potential reward. Should the equity breach the strike price, they could be at risk of assignment, and face steep losses.
These mixed emotions toward F aren't relegated to the options pits. Following Wednesday's upbeat outlook from Stifel Nicolaus, Credit Suisse today started Ford Motor Company (NYSE:F) with a tepid "neutral" rating, and $18 price target. In the wake of this uninspiring brokerage note -- and news of a solar-panel partnership with DTE Energy Co (NYSE:DTE) -- shares of Ford were last seen fractionally lower at $17.40.