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Most Active Options Update: Verizon Communications Inc. (VZ)

Call volume picks up amid Verizon Communications Inc.'s outperformance

by 7/10/2014 2:35 PM
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 Verizon Communications Inc. (NYSE:VZ). Falling off the list since last time were CBS Corporation (NYSE:CBS), Citigroup Inc (NYSE:C), and General Electric Company (NYSE:GE).

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Verizon Communications Inc. is just one of a handful of Dow components trading in the green this afternoon -- thanks to reports of strong second-quarter subscriber growth -- with the shares up 1.2% at $49.47. Not surprisingly, in the stock's options pits, calls are trading at more than two times what is typically seen at this point in the day. Traders are showing a preference for VZ's short-term contracts, as evidenced by the stock's 30-day at-the-money implied volatility, which is up 2.9% to 14.1% -- levels not seen since late April.

The most active VZ option thus far is the weekly 7/11 49-strike call, where 4,393 contracts have changed hands. However, nearly all of the contracts at this now in-the-money strike have traded on the bid side, and data from the International Securities Exchange (ISE) confirms a portion of the day's activity is of the sell-to-close variety. Simply stated, it appears some traders are taking profits off the table ahead of tomorrow night's expiration.

Elsewhere, the equity's weekly 7/11 50-strike call has received notable attention, with 4,040 contracts on the tape at last check. The vast majority of these positions have crossed on the ask side and volume exceeds the 1,106 contracts that make up open interest, making it safe to assume a fresh batch of bullish bets is being initiated.

The out-of-the-money weekly 7/11 50-strike calls are being purchased for a volume-weighted average price (VWAP) of $0.07, making breakeven at tomorrow's close -- when the weekly series expires -- $50.07 (strike plus VWAP). Traders' profit will mount with each additional step north of here, while losses are limited to the initial premium paid, should Verizon Communications Inc. (NYSE:VZ) close out the week south of the round-number $50 mark.


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