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Most Active Options: Ford Motor Company (F), Netflix, Inc. (NFLX), AIG

F, NFLX, and AIG are seeing notable options trading activity today

by 4/12/2013 2:28 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 Ford Motor Company (NYSE:F), Netflix, Inc. (NASDAQ:NFLX), and American International Group Inc (NYSE:AIG). Here is a quick look at today's interesting activity in these options pits.

Ford Motor Company (NYSE:F) is following in the bearish footsteps of the broader equities market this afternoon, with the stock off 1% to trade at $13.42. Ford Motor is now down more than 6% from its Jan. 17 high of $14.30. One speculator in today's session is eyeing a quick rebound for F. Specifically, one block of 20,000 contracts traded at F's weekly 4/26 14-strike call at the ask price of $0.08. Trade-Alert indicated these contracts were opened, pointing to the initiation of fresh bullish positions. In order for these out-of-the-money calls to be profitable, F needs to power above $14.08 (strike price plus premium paid) by the close on Friday, April 26, which is when the contracts expire. The options market isn't too confident the position will be in the money by expiration, as delta for the call is currently docked at 0.27, or 27%. Fundamentally, Ford Motor Company is slated to release its first-quarter earnings report on Wednesday, April 24. Wall Street is calling for a per-share profit of 38 cents.

Eleventh-hour Netflix, Inc. (NASDAQ:NFLX) option players are targeting the stock's weekly 4/12 170-strike put today, where roughly 7,300 contracts have traded on both the ask and the bid side of the aisle. Volume is outstripping open interest, and data from the International Securities Exchange (ISE) suggests the put is seeing a mix of both buy- and sell-to-open activity. The volume-weighted average price (VWAP) for the out-of-the-money puts is $0.34, meaning buyers will begin to profit with each step south of $169.66 (strike less VWAP) NFLX takes over the next couple of hours. Meanwhile, the put writers expect NFLX to remain north of $170 by the end of the session. In this best-case scenario, the puts will expire worthless, and the traders can pocket the full potential profit of $0.36 per contract. At last check, NFLX had shed 0.5% to linger near $172.17, despite CEO Reed Hastings waxing optimistic about the company via his Facebook page last night.

Calls are the options of choice in American International Group Inc's (NYSE:AIG) options pits today. Around 22,000 calls have crossed the tape thus far, compared to roughly 17,000 puts. The stock's April 41 call is one of the more active strikes, where 1,375 contracts have crossed the tape for a VWAP of $0.18. The majority of these contracts have gone off at the ask price, and implied volatility has ticked higher, pointing to buy-to-open activity. Breakeven for the out-of-the-money calls is $41.18, or 2.7% above the stock's current price of $40.12. Risk, meanwhile, is limited to the initial premium paid. Today's trend toward calls marks a change of pace for AIG option traders. At the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 0.52 ranks higher than 77% of other such readings taken during the past year, indicating puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

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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