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The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are J.C. Penney Company, Inc. (NYSE:JCP), BlackBerry Ltd (NASDAQ:BBRY), and Citigroup Inc (NYSE:C).
BBRY options trading is heating up, as investors sort through the latest buyout rumors. Roughly 56,000 put contracts have traded today, keeping pace with call volume and outpacing average intraday put volume by an 11% mark-up. The near-the-money October 8 put, which expires at the end of next week, is currently the most active strike. C is seeing some attention on the put side of the fence as well, after being targeted by call buyers on Friday. Investors appear to be scooping up the October 48 puts ahead of the banking giant's earnings report next week. Finally, here is a look at some interesting JCP spread activity on the tape today.
In what appears to be a recent trend, J.C. Penney Company, Inc. is again seeing what looks like bullish speculative activity, even while the stock plumbs new depths. Earlier today, the shares touched $7.59, their lowest point since February 1982. The stock has since pared its losses to perch at $7.82. Today's largest trade in the troubled retailer's options pits consisted of two 5,000-contract blocks at the May 8 and 13 call strikes. These were executed simultaneously, indicating they were related.
Volume easily trounces open interest at both strikes, suggesting the orders were on the opening side. The May 8 calls crossed at the ask price of $2.13 per contract, while the May 13 calls changed hands below the bid price at $0.69 apiece. In short, it looks as though this is a long call spread, made up of bought-to-open 8-strike calls and sold-to-open 13-strike puts for a net debit of $1.44 per pair of contracts. This is also the maximum potential loss on the trade, should JCP be trading at or below $8 when the options expire in seven-plus months.
The maximum gain, on the flip side, is $3.56 (the difference in strike prices less the total net debit). This would be achieved at expiration if JCP is perched at or above the $13 level. Meanwhile, in order for the spread buyers to be profitable at expiration, JCP needs to be sitting north of $9.44 (the long call strike plus the net premium paid).
Amid the stock's pronounced decline, however, JCP has become a favorite among short sellers. Short interest, numbering 71.7 million shares, represents a staggering 81.6% of the equity's available float. It's highly possible, then, that recent options activity on the bullish side of the fence is being executed on the part of JCP bears looking to hedge their downside bets.