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Of the 20 equities seeing the heaviest options volume in recent sessions, three names of notable interest this afternoon are Citigroup Inc (NYSE:C), Ford Motor Company (NYSE:F), and J.C. Penney Company, Inc. (NYSE:JCP). Here is a quick look at today's interesting activity in these options pits.
Citigroup Inc (NYSE:C) rallied to a two-year high of $48.27 today, prompting some speculators to bet on extended gains through week's end. The stock's weekly 5/10 48-strike call is one of the more sought after positions, where 8,398 contracts have traded at a volume-weighted average price (VWAP) of $0.42. The majority of these have crossed at the ask price, and volume is outstripping open interest, pointing to buy-to-open activity. With the stock last seen at $48.16, these calls are in the money (ITM); however, in order to be profitable, C must rise above $48.42 (strike price plus the VWAP) by the close on Friday. From a wider sentiment standpoint, it's been puts, and not calls, that option traders have been accumulating with some rapidity in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Citigroup's 10-day put/call volume ratio of 0.85 ranks in the 86th percentile of its annual range. Simply stated, puts have been bought to open over calls at a faster-than-usual pace.
Ford Motor Company (NYSE:F) has tacked on 0.7% today to trade at $14.19, and, as such, calls have easily emerged as the options of choice. Roughly 79,000 calls have changed hands so far, representing a 34% mark-up to the average intraday volume. By comparison, around 13,000 puts have crossed the tape. One group of traders is sitting just pennies away from profitable territory based on the bets they've placed throughout the session. Specifically, 3,060 of Ford Motor's weekly 5/10 13.50-strike calls have traded, mostly at the ask price. Implied volatility was last seen 6.2 percentage points higher, and data from the ISE confirms that a number of these positions were bought to open. The VWAP for the ITM calls is $0.70, making breakeven $14.20. Buy-to-open call activity is nothing new in F's options pits, per the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 3.75. Not only does this show that nearly four calls have been bought to open for every put during the past two weeks, but it ranks higher than 70% of similar readings taken in the past year, indicating a healthier-than-usual appetite for long calls over puts.
J.C. Penney Company, Inc. (NYSE:JCP) is bucking the broad-market trend higher today, with the stock feeling the weight of this morning's downbeat analyst attention. At last check, the equity has shed roughly 2.2% to linger near 16.55. Despite this technical setback, option traders are eyeing the stock's newfound perch atop the $16 mark to hold as support over the next several months. Nearly 1,800 of JCP's August 16 puts have changed hands for a VWAP of $1.73. The vast majority of these contracts have gone off at the bid price, and volume is exceeding current levels of open interest, indicating sell-to-open activity. In the best-case scenario, J.C. Penney will stay trading north of $16 through August options expiration, allowing the out-of-the-money puts to expire worthless, and the traders to retain the full potential profit, which is also the net credit received.
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.