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. One name of notable interest this afternoon is MannKind Corporation (NASDAQ:MNKD). Falling off the list since last time were Amazon.com, Inc. (NASDAQ:AMZN), AstraZeneca plc (ADR) (NYSE:AZN), Cisco Systems, Inc. (NASDAQ:CSCO), eBay Inc (NASDAQ:EBAY), J.C. Penney Company, Inc. (NYSE:JCP), and Salesforce.com, inc. (NYSE:CRM).
To say MannKind Corporation has had a volatile first half of 2014 would be a vast understatement. To recap, the shares were trading around $5 at the turn of the calendar year, proceeded to drop to an annual low of $3.80 in late March, and earlier today, MNKD tagged another four-year high of $11.11. What's more, the equity was last seen trading 3.4% lower this afternoon at $10.18. With the stock's 14-day Relative Strength Index (RSI) of 90 sitting in overbought territory, though, a near-term pullback may have been in the cards.
In the equity's options pits, meanwhile, traders have taken a glass-half-empty approach. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the security's 10-day put/call volume ratio of 0.67 ranks in the 87th percentile of its annual range. Simply stated, puts have been bought to open (relative to calls) with more rapidity just 13% of the time within the past year.
This accelerated demand for MNKD puts is in full view today, with the contracts trading at five times the intraday average. (Of note, though, calls are in high demand as well, with volume running at three times what is typically seen at this point of the day). Short-term options are extremely popular, per MNKD's 30-day at-the-money implied volatility (IV), which has soared 15.9% to 101.1% -- its highest reading since early April.
The majority of the action has centered on the stock's weekly 6/6 9-strike put, where 7,026 contracts have changed hands. The majority of these have crossed on the ask side, IV has shot 64.7 percentage points higher, and volume handily outstrips open interest -- collectively inferring the purchase of new positions.
The puts are being purchased for a volume-weighted average price (VWAP) of $0.14, meaning traders will profit if MNKD is sitting south of $8.86 (strike less VWAP) at tomorrow's close -- with gains accruing on a move down to zero. Risk, meanwhile, is limited to the initial premium paid, should the equity remain perched atop $9. Given that MannKind Corporation (NASDAQ:MNKD) has nearly doubled year-to-date amid its sporadic price action -- and today's shift into the red -- some of today's put buying may be at the hands of shareholders protecting paper profits against a steeper end-of-week slide.