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 today is Twitter Inc (NYSE:TWTR), which has seen accelerated call volume in spite of today's pullback.
Twitter Inc -- which is apparently testing a new, more organized hashtag format -- was last seen 1.4% lower at $44.56, retreating from Wednesday's four-month post-earnings high of $48. Despite the dip, option players are apparently gambling on an extended rally for TWTR, with call volume running at a 45% mark-up to the average intraday rate.
Attracting notable attention has been the January 2015 45-strike call, which has seen volume surpass open interest, hinting at fresh initiations. In fact, nearly all of the calls traded in one fell swoop, with a block of 7,447 contracts exchanged near the ask price at $5.80. In other words, it appears the calls were bought to open.
At the same time, a large block of January 2015 40-strike calls traded, but closer to the bid price at $8.35, suggesting they were sold. Against this backdrop, it looks like one speculator may be upping the bullish ante on TWTR.
Specifically, the trader may have rolled her bullish bets higher. She sold to close the now in-the-money January 2015 40-strike calls, and used the proceeds to buy even more calls at the 45-strike. As such, she's expecting Twitter Inc (NYSE:TWTR) shares to climb atop $45 through the next few months. Risk is limited to the initial net debit, should the stock finish south of $45 on Jan. 16, 2015, when the options expire. Reward, meanwhile, is theoretically unlimited to the upside.