Stocks quoted in this article:
The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that 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 today is SunEdison Inc (NYSE:SUNE), which is seeing a changing of the guards in its options pits.
SunEdison Inc has been a long-term outperformer, with the shares roughly tripling in value on a year-over-year basis. After topping out at a five-year high of $24.35 in mid-July, the stock entered a brief period of consolidation that was quickly halted after the company reported an unexpected second-quarter profit last Thursday morning. Since then, the equity has rallied nearly 13% to trade at $21.74.
The withstanding trend in SUNE's options pits, however, has tended toward the bearish side. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 10-day put/call volume ratio of 0.27 ranks in the 74th percentile of its annual range. Simply stated, puts have been bought to open (relative to calls) at a faster-than-usual clip in recent weeks.
In today's session -- with shares of SUNE up 2.6% -- sentiment appears to be shifting among option traders. At last check, calls were trading at four times the average intraday pace -- and all 10 of SUNE's most active options were on the call side. For the sake of comparison, put volume is running at about one-third of what is typically seen at this point in the day. Short-term contracts are in high demand, as evidenced by the equity's 30-day at-the-money implied volatility (IV), which is up 11.9% to 56.7%.
Drilling down on specific strikes in the front-month series, buy-to-open activity has been detected at the in-the-money August 20.50 and 21.50 strikes, as well as the out-of-the-money (OOTM) August 22 and 22.50 strikes. However, the most active SUNE option today is the October 24 call. Traders could potentially be purchasing new positions, as the majority of the contracts have traded at the ask price and IV has edged higher.
With 26.8% of SUNE's float sold short, a portion of today's call buying at the OOTM strikes could be a result of shorts hedging against any additional upside. Also of note, short sellers could also be playing a part in SunEdison Inc's (NYSE:SUNE) most recent rally, as these bearish bettors capitulate to the security's long-term uptrend. Additional gains could be on the horizon, too, as the equity's short-interest-to-float ratio stands at 5.2 times SUNE's average daily trading volume.