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 Yahoo! Inc. (NASDAQ:YHOO).
Calls have been preferred on Yahoo! Inc. in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 50-day call/put volume ratio of 4.20 ranks in the 70th percentile of its annual range. Simply stated, calls have been bought to open over puts at an accelerated clip in the past 10 weeks.
In today's session, calls are trading at a 61% mark-up to the intraday average, and are outpacing puts by a more than 2-to-1 margin. The demand for short-term options is evident, as the equity's 30-day at-the-money implied volatility (IV) has jumped 5.4% to 30.4% -- its highest perch since mid-May.
Receiving notable attention is the June 37 call, where 4,324 contracts have changed hands -- a healthy portion at the ask price, hinting at buyer-driven activity. Plus, IV is up 5 percentage points, pointing to the initiation of new positions. The volume-weighted average price (VWAP) for the calls is $0.57, making at-expiration breakeven $37.57 (strike plus VWAP). Gains are theoretically unlimited with each notch above this mark YHOO is sitting at next Friday's close, while losses are limited to 100% of the premium paid, should the stock settle south of the strike at expiration.
The most active option, meanwhile, is YHOO's June 38 call, where 7,217 contracts are on the tape. The volume is occurring at both the bid and the ask prices -- and IV is 5.7 percentage points higher -- suggesting a healthy mix of sell- and buy-to-open activity, respectively, may be happening. By selling to open the calls, the speculators expect YHOO to maintain its perch south of $38 through next Friday's close; those buying to open the calls expect the stock to power through this overhead mark by front-month options expiration.
The predominant bullish bias among option traders is understandable when looking at YHOO's technical backdrop. Year-over-year, the shares have rallied roughly 37%. More recently, the equity went through a period of consolidation after hitting an eight-year high of $41.72 in early January. However, this pullback was contained by YHOO's 50-week moving average. A few quick bounces off this rising trendline have helped YHOO to resume its longer-term trajectory, and in today's session, the stock was last seen 0.5% higher at $36.50.
Off the charts, Alibaba Group Holding Ltd -- of which Yahoo! Inc. (NASDAQ:YHOO) owns a major stake -- revealed its inaugural U.S. direct-to-consumer online store today. Additionally, rumors are swirling that the Chinese e-commerce giant may price its IPO later this summer.