Stocks quoted in this article:
Of the 20 equities with the heaviest options volume in recent sessions, three names of notable interest this afternoon are Nokia Corporation (ADR) (NYSE:NOK - 4.56), Intel Corporation (NASDAQ:INTC - 22.40), and Ford Motor Company (NYSE:F - 14.20). Here is a quick look at today's interesting activity in these options pits.
Today, NOK announced plans to cut 1,000 additional positions by either eliminating jobs outright or transferring some job functions and employees to a pair of India-based technology service firms that have offices in Finland. The stock has stepped slightly lower in response, luring some eager bearish traders to the table. About 39,000 puts have traded today, outpacing typical intraday put volume by 63%. In focus is the July 3 put, where more than 11,000 contracts have traded on open interest of 3,428. Trade data from the International Securities Exchange (ISE) suggests the majority of these positions are being purchased to open, as bearish bets on the stock's intermediate-term prospects. The volume-weighted average price (VWAP) for today's trades was $0.22, making breakeven at expiration $2.78. This is therefore an effective wager the stock will drop 39% by the close on July 19, when these options expire. This type of outsized move is not out of the question, as the stock has moved roughly 170% during the past six months -- of course that move has been to the upside (from $1.69 on July 17).
With earnings due after tonight's closing bell, INTC is attracting heavy option volume. Call volume has more than quadrupled what's typically expected, and put volume is roughly double the average intraday volume. Taking the spotlight is the January 2013 23.5-strike call, which has seen nearly 50,000 contracts trade on open interest of just 12,000. The lion's share of the volume has traded at the ask price, and implied volatility has shifted 12.1 percentage points higher, both of which are good signs these calls are being purchased to open. As these options expire at the close tomorrow, they are extremely short-term bets on a positive reaction to earnings. Breakeven at expiration would be $23.62, or the strike price plus the VWAP of $0.12 -- a 5.4% move from the stock's current price. In the immediate wake of its Oct. 16 earnings report, for comparison's sake, INTC dropped just 2.5%. Additionally, the front-month, at-the-money (22.50-strike) straddle is priced at $0.87, or 3.9% of the stock's price, implying a move of 3.8% (higher or lower) in the shares through expiration tomorrow evening. If INTC doesn't respond to earnings as dramatically as today's call buyers hope, however, the most the traders can lose is the premium paid.
Finally, short-term traders have turned their attention to F today, most notably the weekly 1/25 14-strike put, which will expire at the end of next Friday's session. Nearly 11,600 contracts have traded on this option today, more than 90% of which changed hands at the ask price. Although volume is nearly on par with open interest, data from the ISE points to buyer-driven activity. F shares have been racking up new annual highs of late, but this trader is placing a bearish bet as the stock pulls slightly lower in today's trading. The options have traded at a VWAP of $0.14, making the breakeven price (at expiration) $13.86, which is territory F shares explored as recently as Jan. 10.
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.