Stocks quoted in this article:
The 20 stocks below have attracted the highest options volume during the past 10 trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Three names of notable interest this afternoon are Microsoft Corporation (NASDAQ:MSFT), BlackBerry Ltd (NASDAQ:BBRY), and Citigroup Inc (NYSE:C).
After spending most of the day in the red following this morning's round of downgrades, BBRY is now in the green, after Fairfax Financial Holdings Ltd. -- the smartphone maker's largest shareholder -- agreed to take the struggling company private for $9 per share. Earlier, the stock was put on the short-sale restricted list, causing put volume to accelerate to more than 11 times its average intraday pace. C, meanwhile, is still trading 3.1% lower after providing a dreary revenue outlook over the weekend. In C's options pits, a number of spread strategists are targeting the stock's October puts. Elsewhere, here is a quick look at the interesting activity in MSFT's options pits.
Microsoft Corporation is tentatively scheduled to step into the earnings confessional sometime between Oct. 14 and Oct. 18. Considering the stock surrendered more than 11% in the session following its mid-July quarterly showing, one shareholder in today's session appears to be using options to protect her portfolio against another earnings-induced pullback. In mid-morning trading, two symmetrical blocks of 4,010 contracts changed hands at MSFT's October 31 put and October 35 call. The former changed hands at the ask price of $0.18, while the latter crossed at the bid price of $0.11. Data from the International Securities Exchange (ISE) confirms buy- and sell-to-open activity, respectively, suggesting a collar was initiated for a net debit of $0.07 per pair of contracts.
By establishing the two-legged hedge, the speculator has locked in an acceptable sale price of $31 per share, thanks to the long put, should MSFT fall south of this level through the close on Oct. 18 (the stock is currently trading at $32.75). Meanwhile, selling the out-of-the-money calls helps to cover the cost of the protective puts; however, it also puts a cap on any upside above $35. Specifically, in the case that MSFT rallies north of this mark, the covered calls would move into the money, and the collar strategist could be required to deliver her stock at $35 apiece, regardless of where the equity may be trading.
In the final hour or so of trading, Microsoft Corporation (NASDAQ:MSFT) was sticking close to breakeven, despite unveiling the newest iterations of its Surface tablet at a company event earlier.