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 Nokia Corporation (ADR) (NYSE:NOK).
Option traders have taken the bullish route on Nokia Corporation (ADR) in recent weeks, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, over the past 10 days, the stock has racked up a call/put volume ratio of 182.33 on these exchanges, which ranks in the highest percentile of all other comparable readings taken in the past year.
In today's session, however, a bearish buzz seems to be building, as traders use both calls and puts to express skepticism toward NOK. On the call side, the stock's July 8 strike has seen roughly 2,400 contracts change hands. Almost all of these have gone off on the bid side, implied volatility edged higher on several block trades, and volume outstrips open interest -- collectively pointing to sell-to-open activity.
By writing the calls, the speculators expect NOK to continue to churn south of $8 (the stock was last seen about 3% lower at $7.64) through the close on Friday, July 18 -- when front-month options expire. In this best-case scenario, the calls will expire worthless, and the traders can retain the initial credit collected as their full potential reward. However, should NOK stage a rally over the next several weeks and topple the $8 mark, the call sellers may be at risk of being assigned -- and face theoretically unlimited losses.
Elsewhere, put players are targeting the August 8 strike, where nearly 2,600 contracts have been exchanged -- 90% on the ask side, pointing to buyer-driven volume. Plus, volume exceeds current levels of open interest, making it safe to assume that new bearish positions are being initiated.
While these puts are presently in the money, the stock needs to be sitting south of breakeven at $7.45 (strike less the volume-weighted average price of $0.55) at the close on Friday, Aug. 15 -- when front-month options expire. Profit will accrue with each additional step below here (on a move down to zero), while risk is limited to the initial premium paid, should Nokia Corporation (ADR) (NYSE:NOK) settle north of $8 at back-month options expiration.