Stocks quoted in this article:
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past five trading days. The companies highlighted are those 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 Bank of America Corp (NYSE:BAC), Pandora Media Inc (NYSE:P), and General Electric Company (NYSE:GE).
Pandora Media Inc is following the broad market lower today, despite earning a price-target hike ahead of the open. One trader appears to be expressing a neutral-to-bearish outlook by selling a bear call spread on the January 2014 27- and 33-strike calls. Bank of America is once again seeing notable put volume today, with the January 2014 12-strike put in focus. Nearly 14,000 contracts have traded at this out-of-the-money strike, almost three-quarters of which traded at the ask price. Finally, here is a look at some interesting bullish activity transpiring today on General Electric Company.
GE shares are sitting just below breakeven today at $24.02, and options trading is relatively light (compared to what is seen on a typical day). One strike, however -- the weekly 10/4 24-strike call -- has garnered notable attention, with nearly 8,100 contracts on the tape. The lion's share of these calls traded at the ask price, implied volatility has ticked up 4.1 percentage points, and volume easily exceeds existing open interest. In short, it looks as though traders are buying new calls in the hopes that GE moves higher ahead of weekly options expiration at Friday's close.
These call buyers acquired the positions for a volume-weighted average price (VWAP) of $0.23, meaning breakeven at expiration is $24.23 (the strike price plus the VWAP). This is less than 1% away from the stock's current price, and in territory GE visited as recently as last week. Delta for the option currently stands at 0.52, or 52%, revealing that the odds of this call being in the money by Friday's close are roughly in line with that of a coin flip.
Today's call buying echoes the longer-term trend toward General Electric Company (NYSE:GE) calls. In the last 50 trading days on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), option speculators have purchased to open nearly four GE calls for every put. The resulting call/put volume ratio of 3.80 is higher than 98% of the past year's readings. In other words, long calls have rarely been in greater demand (relative to puts).