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 Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOG), and Bank of America Corp (NYSE:BAC).
Google Inc is not capitalizing on an early morning price-target hike at Goldman Sachs, with the stock off 0.3% at last check. In GOOG's options pits, the weekly 11/8 1,010-strike put is seeing buy-to-open activity, as speculators brace for more downside through week's end. Meanwhile, Bank of America Corp is in the green, but a number of traders are forecasting a near-term ceiling by selling to open the weekly 11/22 14.50-strike calls. Finally, here's a closer look at how one Microsoft Corporation speculator is limiting her risk on a bullish play (but capping her upside in the process).
Microsoft Corporation has moved higher today, bringing its year-to-date advance to a formidable 34%. One speculator is eyeing additional gains over the next several weeks by employing a long call spread in the front-month series. Earlier in the session, two symmetrical blocks of 19,524 November 36 calls and November 37 calls switched hands. The former went off at the ask price of $0.28, while the latter crossed at the bid price of $0.06. Implied volatility ticked higher at both legs, suggesting the moderately bullish strategy was initiated for a net debit of $0.22 per pair of contracts.
By creating this spread, the trader will begin to turn a profit as MSFT moves north of $36.22, which is the bought strike plus the net debit. Her reward, however, is capped at $0.78 -- the difference between the two call strikes, less the initial net debit -- no matter how high the stock should soar north of $37, due to the sold call. Meanwhile, sacrificing some of her reward by writing the call also limits her risk to the initial cash outlay of $0.22, should Microsoft Corporation (NASDAQ:MSFT) remain at or below $36 through the close on Nov. 15, when these options are due to expire. At last check, the stock was lingering near $35.86.