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. Three names of notable interest this afternoon are Yahoo! Inc. (NASDAQ:YHOO), Bank of America Corp (NYSE:BAC), and Google Inc (NASDAQ:GOOG).
As Bank of America Corp prepares to release its quarterly earnings statement next Wednesday morning, the stock's October 15 call is seeing a mix of buy- and sell-to-open activity, per data from the International Securities Exchange (ISE). Elsewhere, Google Inc weekly puts are once again popular; this time it's the weekly 10/11 870-strike put that's garnering its fair share of attention. Meanwhile, here's a closer look at where short-term Yahoo! Inc. speculators are pinning their post-earnings hopes.
Yahoo! Inc. is slated to take its turn in the earnings limelight after the close next Tuesday, and one group of speculators in today's session appears to be hoping that history repeats itself. Nearly 2,500 October 34 calls have crossed the tape so far, a healthy portion of which have done so on the ask side. With implied volatility on the rise, it seems that a fresh batch of bullish bets is being initiated. With YHOO last seen near $34.07, these calls are slightly in the money. However, in order for the traders to turn a profit, the security must rise about 2.9% above present levels to topple the breakeven mark of $35.06, which is the strike plus the volume-weighted average price (VWAP) of $1.06.
As mentioned, the company will unveil its quarterly earnings report next week. Yahoo! has a solid history in the confessional, and has matched or exceeded analysts' bottom-line estimates in each of the past eight quarters. The equity has followed up these fundamental wins by posting an average gain of 2.3% and 1.4% in the day and week, respectively, after announcing its results. For YHOO's third quarter, Wall Street is calling for a per-share profit of 33 cents -- two cents shy of its year-ago results.
It's not all pre-earnings activity in YHOO's options pits, though. Longer-term traders are looking for extended gains over the next two-plus months by picking up the December 40 calls for a VWAP of $0.66. The majority of the 1,667 contracts traded here have done so at the ask price, and implied volatility has ticked higher, hinting at buy-to-open activity. Breakeven for the out-of-the-money calls is $40.66, or territory not explored by YHOO since January 2006. As such, delta for the option is docked at 0.20, or 20%, suggesting a 1-in-5 chance the position will find its way into the money during the course of its lifetime. Should Yahoo! Inc. (NASDAQ:YHOO) fail to topple the $40 mark, the most the speculators have risked is the initial cash outlay.