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Most Active Options: Bank of America Corp, Intel Corporation, Micron

BAC, INTC, and MU are seeing notable options trading activity today

by 6/18/2013 2:15 PM
Stocks quoted in this article:

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), Intel Corporation (NASDAQ:INTC), and Micron Technology, Inc. (NASDAQ:MU). Here is a quick look at today's interesting activity in these options pits.

Bank of America Corp (NYSE:BAC) is following in the bullish footsteps of the broader equities market today, with the stock 0.4% higher to trade at $13.25. The security's upward momentum has prompted one group of speculators to eye a move into territory not charted in two years. Specifically, 8,998 weekly 6/28 14-strike calls have changed hands, 89% of which have done so at the ask price. Implied volatility is up, and data from the International Securities Exchange (ISE) confirms that a number of positions have been bought to open. The volume-weighted average price (VWAP) for the calls is $0.02, meaning BAC must rise above $14.02 (strike plus VWAP) by next Friday's close in order for these traders to turn a profit. Should the stock fail to topple the strike, the most the traders have on the line is the initial premium paid. Although Bank of America has not traded north of $14 since March 2011, this optimistic outlook isn't out of the question, considering the stock tagged a fresh multi-year peak of $13.99 as recently as May 31. In the near term, BAC could find some options-related support atop the $13 mark, as peak put open interest in the front-month series resides at the June 13 strike. This level could translate into a foothold for the equity as the more than 72,500 contracts that rest here begin to unwind ahead of Friday's close.

Intel Corporation (NASDAQ:INTC) has surged 1.2% today, and, at last check, the stock was lingering near $25.40. The stock is now sporting a roughly 23% year-to-date advance, but some traders believe this upward trajectory will stall out over the next few months. Of the roughly 12,800 September 25 puts that have crossed the tape thus far, 86% have gone off at the ask price. Volume is outstripping open interest, hinting at buy-to-open activity. Based on the VWAP of $1.06, the calls will become profitable with each step below $23.94 (strike less VWAP) Intel takes through the close on Sept. 20. Delta for the call is perched at negative 0.45, suggesting a 45% chance the position will land in the money ahead of expiration. Meanwhile, The Wall Street Journal released an article yesterday unleashing the details of INTC's supercomputer Xeon Phi chip line. Ahead of the story, Numis downgraded fellow chip maker ARM Holdings plc (ADR) (NASDAQ:ARMH), claiming the company could be poised to lose market share to Intel Corporation.

Micron Technology, Inc. (NASDAQ:MU) is having a very good week, tacking on over 6% since last Friday's close. In fact, the stock hit a five-year high of $13.74 earlier today. This technical tenacity is nothing new for a security that's more than doubled in 2013; however, some recent upbeat attention from the brokerage bunch is only stoking the bullish flames. Not wanting to sit out on the party, Raymond James raised its price target for Micron Technology to $17 from $12 this morning, while giving the stock a "strong buy" rating. In spite of this, the June 13.50 put has seen greater than 8,500 contracts exchanged, mostly at the ask price. Only 1,068 contracts reside here, making it safe to assume that new positions are being initiated. The VWAP for the put is $0.56, making breakeven $12.94, or 4.4% below the stock's present price of $13.54. It could be these bearish traders are expecting an earnings miss. The company is slated to unveil its quarterly results after tomorrow's close. Micron has a dismal history in the confessional, and has fallen short of consensus profit estimates in each of the last eight quarters. Analysts are expecting earnings of 2 cents per share in MU's fiscal third quarter.

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.

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