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Most Active Options Update: J C Penney Company Inc (JCP)

Front-month call buyers expect J C Penney Company Inc to rally over the next month

by 7/24/2014 1:49 PM
Stocks quoted in this article:

The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that 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 J C Penney Company Inc (NYSE:JCP), as traders target the retailer's short-term call options.

Most Active Options Table - MID

With call volume on J C Penney Company Inc totaling about 13,000 contracts this afternoon -- slightly outpacing the stock's daily average -- the most active strike is the August 9 call. So far, more than 3,900 contracts have changed hands at this front-month strike, with 77% trading on the ask side. Data from the International Securities Exchange (ISE) confirms today's speculative players are buying to open new bullish bets on JCP at this strike.

JCP is up 2.7% to trade at $9.01 this afternoon, which means those August 9 calls are right at the money. Based on today's volume-weighted average price (VWAP) of $0.46, call buyers will be able to collect a profit at expiration if JCP is trading above $9.46 (strike price plus VWAP). That would necessitate a rally of about 5% from current levels.

With the stock down nearly 45% year-over-year, bullish speculation is somewhat rare for J C Penney Company Inc (NYSE:JCP). Short interest accounts for almost 29% of the stock's float, and only 16% of analysts tracking the stock have deemed it worthy of a "buy" rating.


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