Stocks quoted in this article:
The 20 stocks listed below have seen the highest total options volume over the course of the last 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, and highlighted names are new to the list since the last study was run. One equity seeing extremely heavy option volume today is Intel Corporation (NASDAQ:INTC).
Intel Corporation is in the headlines today after lifting its full-year sales guidance and subsequently attracting a host of bullish brokerage attention. Options traders have responded by flooding the options pits; call volume is outpacing normal levels by a factor of 11, while put volume is quintuple what's typically seen. All told, more than 400,000 option contracts have traded, making Intel the second-most active equity.
A large chunk of this volume is attributed to two longer-term strikes: the October 30 and 33 calls. According to Trade-Alert, one investor sold to close 25,000 of the lower-strike calls in order to buy (to open) 75,000 of the October 33 options. In other words, he is rolling his position to a higher strike, and purchasing three times as many contracts, while at it. The 30-strike calls were purchased in late April for $0.20 apiece, and today's block closed for $1.08, returning $2.7 million -- the net premium collected, times the number of contracts, times 100 shares per contract -- for a profit of $2.2 million.
Breakeven on the newly purchased options -- at expiration -- is $33.27, or the strike price plus the $0.27 premium paid per contract. Above this level, gains are theoretically unlimited. The maximum risk, if the traders hold the contracts through expiration and Intel Corporation (NASDAQ:INTC) shares end up south of the 33 strike, is 100% of the premium paid. Given the large block size, this amounts to $2.03 million, which is still less than the profit collected from the purchase and subsequent sale of the October 30 calls.
On the charts, Intel gapped higher this morning to hit $30.06, its highest point since March 2004. Currently, the stock is up 6.9% at $29.89.