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Of the 20 equities seeing the heaviest options volume in recent sessions, three names of notable interest this afternoon are Bank of America Corp (NYSE:BAC), Zynga Inc (NASDAQ:ZNGA), and Ford Motor Company (NYSE:F). Here is a quick look at today's interesting activity in these options pits.
Bank of America Corp (NYSE:BAC) is slated to take its turn in the earnings confessional before the market opens tomorrow, and today's options players are betting on a quarterly win. The July 14 call is once again in focus, where 70,578 contracts have traded for a volume-weighted average price (VWAP) of $0.19. The majority of these calls have gone off at the ask price, implied volatility has soared 5.3 percentage points, and data from the International Securities Exchange (ISE) confirms buy-to-open activity. In order for the speculators to turn a profit, BAC must power above $14.19 (strike price plus the VWAP) ahead of this Friday's close. This breakeven mark represents expected upside of 1.9% from the stock's current perch at $13.92. On the charts, the equity has added an impressive 78% year-over-year, and this technical strength was witnessed in today's session when BAC tagged a fresh two-year peak of $14.02. Should the stock put forth a solid quarterly showing tomorrow, additional gains could be on the horizon. No fewer than 16 out of 24 analysts have slapped BAC with a "hold" or "strong sell" recommendation, and the consensus 12-month price target of $13.76 stands at a discount to present levels. A re-evaluation of ratings in the wake of BAC's second-quarter earnings report could translate into a contrarian boon for the stock.
Zynga Inc (NASDAQ:ZNGA) has fallen by the wayside today, with the shares down 2.3% to trade at $3.46. One group of speculators is betting on a steeper slide over the next several months, and they're targeting the December 2.50 puts. All of the 1,252 contracts traded here have crossed on the ask side, and implied volatility is up 1.7 percentage points, hinting at the initiation of a new bearish bets. Based on the VWAP of $0.11, the expectations are for ZNGA to slide 31% to land below breakeven at $2.39 (strike less the premium paid). Should the stock fail to breach the strike price by December expiration, though, the most the traders stand to lose is the initial premium paid. From a wider sentiment standpoint, the stock's 20-day ISE/Chicago Board Options Exchange (CBOE)/NASDAQ OMX PHLX (PHLX) call/put volume ratio of 6.13 shows that long calls have been in order in recent weeks. In the near term, this campaign for calls could create a headwind for ZNGA as peak call open interest in the front-month series rests at the overhead 3.50 strike. Simply stated, ZNGA could meet some options-related resistance as the nearly 25,700 contracts that reside here begin to unwind ahead of Friday's close.
Following Monday's run to a multi-year high, Ford Motor Company (NYSE:F) has taken a turn for the worse in today's session. At last check, the stock was down 3.2% to hover near $16.57, after Goldman Sachs axed the equity from its coveted "conviction buy" list this morning. Despite today's downturn, call volume is accelerated, trading at an 80% mark-up to its average intraday volume. Option players are looking at a longer-term rebound for F, and are focusing on the January 2014 17-strike calls. Around 11,150 contracts have traded here (including one large block of 10,000 positions), nearly all of which have done so at the ask price. With implied volatility on the rise, it appears a portion of the day's activity is of the buy-to-open kind. The VWAP for the calls is $1.06, meaning traders will begin to profit with each step north of $18.06 F takes through January expiration. This breakeven mark resides in territory not charted by F since January 2011. Technically, the stock has soared 79% over the past 52 weeks. As such, the equity's Relative Strength Index (RSI) is docked at 71 -- in overbought waters. In other words, a near-term pullback may have been in the cards.
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.