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Of the 20 equities seeing the heaviest options volume in recent sessions, three names of notable interest this afternoon are American International Group Inc (NYSE:AIG), Dell Inc. (NASDAQ:DELL), and Barrick Gold Corporation (USA) (NYSE:ABX). Here is a quick look at today's interesting activity in these options pits.
Although the trend in American International Group Inc's (NYSE:AIG) options pits has tended toward the bullish side of late, one of the more active strikes in today's session suggests some speculators are betting on a steep slide over the next several months. All of the 1,870 November 41 puts that have traded have gone off at the ask price, implied volatility has ticked higher, and volume is outstripping open interest, pointing to buy-to-open activity. The expectation for purchasing the deep out-of-the-money (OTM) puts is for AIG to fall south of $41 by the close on Nov. 15. More specifically, the volume-weighted average price (VWAP) for the puts is $0.98, making breakeven $40.02 (strike less VWAP), or 14.7% below the stock's current price of $46.94. On the charts, the equity has tacked on a formidable 33% in 2013. In the near term, however, the stock's advance could be capped at the $47 mark. In the front-month series, peak call open interest rests at the July 47 strike. This could translate into options-related resistance as the more than 18,000 contracts that reside here begin to unwind ahead of Friday's close.
Amid the uncertainty surrounding tomorrow's supposed special meeting of shareholders, option volume is accelerated on Dell Inc. (NASDAQ:DELL), trading at nearly five times the average intraday volume. One of the more active strikes today is the August 14 call, which has seen 31,084 contracts cross the tape. Almost half of the volume at this OTM strike came from one block of 14,940 calls that crossed the tape at the ask price of $0.08. With implied volatility jumping 4.2 percentage points, it appears new positions are being initiated. Based on the entry price, DELL needs to move north of $14.08 (strike plus premium paid) by the time the closing bell sounds on Aug. 16 in order for the trader to turn a profit. This represents expected upside of 9% to the stock's present price of $12.89. Outside of the options pits, the battle between Michael Dell and Carl Icahn continues, with reports surfacing that the vote over whether to take the company private or have it remain public -- originally scheduled for tomorrow morning -- may be delayed a week.
Barrick Gold Corporation (USA) (NYSE:ABX) is headed south today, as the stock succumbs to pressure from declining gold prices. At last check, the equity had shed 1.4% to trade at $15.80. This negative price action is nothing new for ABX, which has surrendered 55% year-to-date. However, this trip down the charts hasn't stopped one group of option traders from eyeing a rebound over the next six months. Of the 12,680 January 2014 20-strike calls that have been exchanged, 71% have done so on the ask side, implied volatility is up 1.8 percentage points, and data from the International Securities Exchange (ISE) confirms that a number of positions have been bought to open. Breakeven for the deep OTM calls is $21.06 (strike plus VWAP of $1.06), or in territory not charted by ABX since early June. The options market isn't too confident that ABX will muscle higher throughout the option's lifetime, as delta for the call is docked at 0.32, or 32%. Simply stated, there is a less than 1-in-3 chance the position will land in the money ahead of January expiration.
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. The companies highlighted are those that are new to the list since the last time the study was run. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.