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 Cisco Systems, Inc. (NASDAQ:CSCO), Citigroup Inc (NYSE:C), and Vodafone Group Plc (ADR) (NASDAQ:VOD). Here is a quick look at today's interesting activity in these options pits.
Cisco Systems, Inc. (NASDAQ:CSCO) has shown technical fortitude in 2013, with the stock up 23% year-to-date. However, the equity has struggled with the broader markets in recent days, and has shed 3.4% since hitting fresh 52-week high of $24.98 last Thursday. In today's session, the stock was last seen 1.4% lower, threatening to close south of its 20-day moving average for the first time since May 8. More losses are on the horizon, according to one group of speculators who have picked up 5,793 weekly 6/28 24-strike puts for a volume-weighted average price (VWAP) of $0.28. The majority of these out-of-the-money (OTM) calls have crossed on the ask side, implied volatility has surged 6.6 percentage points, and volume is handily outstripping open interest, pointing to buy-to-open activity. Based on the premium paid, the expectations are for Cisco Systems to land south of $23.72 (strike price less VWAP) by week's end. This breakeven mark not only represents expected downside of 1.7% from the equity's current perch at $24.14, but also territory not explored on an intraday basis since May 29. Should the stock fail to breach the strike price by Friday's close, the most the traders stand to lose is the initial cash outlay. Outside of the options pits, sentiment among analysts is rather sanguine, as exhibited by Wedbush's upwardly revised price target last Friday.
Citigroup Inc (NYSE:C) has also succumbed to the broad-market bloodbath today, with the shares off 3.1% to trade at $45.42. Given the stock's impressive year-over-year gain of 62%, some speculators are wagering on a quick rebound through the end of the week. A healthy portion of the 4,728 weekly 46-strike calls traded have gone off at the ask price, implied volatility is 9.5 percentage points higher, and only 589 contracts make up open interest here. Summing it all up, it appears that new bullish positions are being initiated. The VWAP for the OTM calls is $0.60, making breakeven $46.60 (strike plus VWAP), or 2.6% above present trading levels. From a wider sentiment standpoint, puts have been preferred among options expiring in the next three months. Specifically, Citigroup's Schaeffer's put/call open interest ratio (SOIR) of 0.99 ranks higher than all other such annual readings. In other words, short-term speculators are more put-heavy now than at any other time within the past year.
Vodafone Group Plc (ADR) (NASDAQ:VOD) is hovering on both sides of breakeven today, following this morning's merger-and-acquisition news. However, the stock has been making a series of lower highs and lower lows since tagging an annual peak of $30.80 on April 29. This struggling price action has a number of speculators eyeing the $28 mark, and they're betting on this former layer of support to show its face as a near-term level of resistance. Almost all of the 2,960 August 28 calls that have been exchanged have done so at the bid price, and volume exceeds current levels of open interest, suggesting sell-to-open activity. Ideally, VOD will remain south of $28 -- the stock is presently trading at $27.25 -- through the close on Aug. 16, allowing the calls to expire worthless, and the traders to retain the net credit collected. According to Trade-Alert, the VWAP for the OTM calls is $0.68. During the past 50 sessions, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have shown a fondness for sold-to-open calls, and have initiated 1.36 short calls for every long call.
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.