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 Ford Motor Company (NYSE:F), Citigroup Inc (NYSE:C), and AT&T Inc. (NYSE:T). Here is a quick look at today's interesting activity in these options pits.
Ford Motor Company (NYSE:F) has succumbed to today's broad-market downturn, and was last seen 1.3% lower at $12.76. Today's negative price action only highlights the stock's recent struggles, with F off roughly 11% from its annual high of $14.30, which was tagged in mid-January. Despite this move lower, some speculators are hoping the stock will maintain its perch atop the $11.50 mark -- at least over the next six sessions. All of the 1,478 contracts traded at Ford Motor's weekly 4/26 11.50-strike put have gone off at the bid price, and only 23 positions make up open interest, pointing to sell-to-open activity. By initiating these short puts, traders expect F to remain above $11.50 through next Friday's close, a time frame that encompasses the company's quarterly earnings report. In this best-case scenario, the puts will expire worthless, and the speculators can pocket the full potential profit of $0.03 per contract, which Trade-Alert indicated was the volume-weighted average price (VWAP). On the charts, F has not traded south of $11.50 on an intraday basis since Dec. 21. As mentioned, Ford Motor Company will unveil earnings ahead of the open next Wednesday. Ford has bested analysts' bottom-line expectations in each of the last four quarters, and Wall Street is calling for a first-quarter profit of 38 cents per share.
With April-dated options expiring at tomorrow's close, one Citigroup Inc (NYSE:C) speculator has turned her attention to the May series to bet on a pullback for the stock. Around 10:00 a.m. ET on the International Securities Exchange (ISE), four blocks totaling 6,100 puts traded simultaneously at C's May 40 and May 44 strikes. The former traded at an average bid price of $0.23, while the latter went off at a mean ask price of $0.97, resulting in an initial entry price of $0.74. By initiating this debit spread, the speculator expects Citigroup to finish south of breakeven at $43.26 (bought strike minus net debit) by the close on Friday, May 17 -- when the options expire. However, in order for her to pocket the full potential profit of $3.26 (the difference between the two strikes less the net debit), C needs to land right at the sold strike of $40, allowing both legs to expire worthless. Risk, meanwhile, is limited to the initial premium paid. Technically, Citigroup Inc has added a formidable 14.3% in 2013, and was last seen trading at $45.22.
In AT&T Inc's (NYSE:T) option pits today, one group of traders is forecasting some stagnation over the next two months. Of the 1,456 calls exchanged at T's June 40 strike, 94% have crossed the tape at the bid price, and volume is outstripping open interest, indicating the initiation of new positions. Ideally, T will remain south of $40 through June expiration, allowing the speculators to collect the maximum reward of $0.27 per contract, which is the VWAP. This could also be part of a covered-call strategy, in which shareholders who may be writing these calls would be required to deliver them at $40 per share, should AT&T muscle north of this mark over the next two months. Should the equity continue to churn below the strike price, the investors have simply increased their rate of return. Looking at the security's technical set-up, AT&T has been running into overhead resistance at the $38 level since July 2012. Meanwhile, the Dow component will step into the earnings confessional after the market closes next Tuesday. AT&T Inc's profit has arrived above Wall Street's estimates in three of the last four quarters, and analysts are projecting earnings of 64 cents per share in Ma Bell's first 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.