Stocks quoted in this article:
The 20 stocks listed in the table below 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. Three names of notable interest this afternoon are J.C. Penney Company, Inc. (NYSE:JCP), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT).
Apple Inc. will unveil its fiscal fourth-quarter results after tonight's close, and ahead of the event, option players are scooping up 1.85 calls for every put. Meanwhile, Microsoft Corporation is consolidating a portion of last Friday's earnings-induced gains. In MSFT's options pits, one speculator appears to be initiating a calendar ratio spread using January 2014 30-strike and April 2014 31-strike calls. Finally, here's where short-term J.C. Penney Company, Inc. traders are targeting an end-of-the-week finish, as the stock rallies on a positive sales projection.
After initially churning near breakeven in the early half of the session, shares of J.C. Penney Company, Inc. were last seen roughly 6% higher at $7.22. The quick turnaround on the charts comes soon after the struggling retailer reiterated to investors an upbeat same-store sales forecast for the third quarter. In JCP's options pits, calls are outpacing puts by a margin of more than 2-to-1. The two most sought-after positions thus far are the weekly 11/1 7- and 8-strike calls, which have seen a collective 14,882 contracts change hands, mostly at the ask price. Implied volatility (IV) has soared 12-plus percentage points at each strike, hinting at buy-to-open activity. Overall, 30-day, at-the-money IV has been on the rise in JCP's options pits, up from 74.9% on Oct. 14 to 121.7% currently.
Thanks to today's positive price action, the 7-strike calls are currently in the money. However, in order for these traders to turn a profit, the stock must muscle its way north of $7.26, which is the strike plus the volume-weighted average price (VWAP) of $0.26, ahead of Friday's close. Meanwhile, breakeven for the out-of-the-money 8-strike calls is $8.05 (strike plus the VWAP of $0.05), or 11.5% above the present price. Risk for both sets of call buyers is limited to the initial premium paid. The beleaguered retailer remains a favorite among short sellers -- 52% of its float is currently sold short -- so it's possible some of this call buying, particularly at the overhead 8 strike, is the work of short sellers looking to hedge their bets in the near term.
J.C. Penney Company, Inc. (NYSE:JCP) is scheduled to unveil its full third-quarter earnings report before the open on Tuesday, Nov. 19.