Stocks quoted in this article:
The 20 stocks listed below have seen 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 stock seeing bearish speculation (even as it touches new highs) is Yahoo! Inc (NASDAQ:YHOO).
Shortly after the opening bell, Yahoo! Inc. tagged another multi-year high. Specifically, the shares hit $40.60, their highest point since January 2006. In 2013 alone, the shares have more than doubled, easily outperforming all broad-market barometers. Against this impressive backdrop, however, some speculators are betting on a longer-term pullback.
The most active strike in today's trading is the July 2014 42-strike put, where almost 5,000 contracts have changed hands versus existing open interest of 72 contracts. A number of large and mid-sized blocks have traded at the ask price, and implied volatility is slightly higher, collectively suggesting the presence of buy-to-open orders. Data from the International Securities Exchange (ISE) confirms this hunch.
Breakeven for this put -- based on the volume-weighted average price (VWAP) of $5.44 per contract -- is $36.56, or the strike price less the VWAP. This is 9.5% below the stock's current price of $40.39, with expiration set seven months in the future. The current odds of this bearish bet resting in the money at expiration are effectively a coin flip, based on the delta reading of negative 0.49. If YHOO manages to move north of the $42 level by July 2014 expiration, the most today's put buyers stand to lose is 100% of the premium paid.
Schaeffer's put/call open interest ratio (SOIR) for Yahoo! Inc. (NASDAQ:YHOO) currently stands at 0.64. Although the absolute reading reveals that call open interest outweighs put open interest among stocks with three months or less until expiration, it is higher than 89% of similar readings taken during the past 12 months. In other words, from a relative perspective, short-term Yahoo! options speculators have rarely been more put-focused.