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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), Tesla Motors Inc (NASDAQ:TSLA), and JPMorgan Chase & Co. (NYSE:JPM). Here is a quick look at today's interesting activity in these options pits.
Ford Motor Company (NYSE:F) is down roughly 1.1% today to trade at $13.95, but this negative price action isn't deterring one group of speculators from betting on F to stage quite a rebound over the next several weeks. Of the 4,354 contracts traded at the June 15 call, 72% have gone off at the ask price, and implied volatility was last seen higher, pointing to buy-to-open activity. The volume-weighted average price (VWAP) for the out-of-the-money (OOTM) calls is $0.10, making breakeven $15.10 (strike price plus VWAP). Should the stock fail to muscle above the $15 mark -- a feat not accomplished since May 2011 -- the most the traders can lose is the initial net debit. With implied volatility at this strike currently deflated relative to Ford Motor's 20-day historical (realized) volatility (21% vs. 26.5%), the speculators can rest easy knowing premium is relatively inexpensive at the moment.
Another day, another new intraday high for Tesla Motors Inc (NASDAQ:TSLA), with the stock jumping to $87 this morning. Although TSLA has pared a portion of these earlier gains, the equity is still up more than 10%, and was last seen lingering near $84.96. Not everyone believes the rally can continue, and, in today's session, traders are targeting TSLA's May 90 calls. A healthy portion of the 8,795 contracts traded have done so at the bid price, volume is outstripping open interest, and data from the International Securities Exchange (ISE) confirms that a number of these positions have been sold to open. Ideally, Tesla Motors will remain south of the $90 mark through the close on Friday, allowing the calls to expire worthless, and the traders to retain the maximum potential profit, which is also the initial credit collected. According to Trade-Alert, the VWAP for the OOTM calls is $2.44. Delta for the call is docked at 0.35, or 35%, suggesting a roughly 1-in-3 chance the option will land in the money ahead of expiration.
Call and put volume is running at accelerated levels on JPMorgan Chase & Co. (NYSE:JPM) today. Around 80,000 calls and 63,000 puts having changed hands thus far, representing a 91% and 35% mark-up to the average intraday volumes, respectively. One trader is using options from both sides of the aisle to bet on a big move by the stock over the next five weeks. Specifically, the speculator bought a block of 7,500 June 45 puts for $0.28, while simultaneously buying a symmetrical block of June 50 calls for $0.90. In other words, it appears he established a long strangle for a net debit of $1.18. In order to profit, JPM must rise above $51.18 (call strike plus net debit) or fall below $43.82 (put strike less net debit) by the close on June 21 -- the stock is currently hovering around $49.43. Gains are theoretically unlimited to the upside, and can be quite substantial to the downside. Risk, meanwhile, is capped at the initial cash outlay. Looking ahead, JPMorgan Chase has a shareholder meeting tentatively scheduled for May 21, which could have the potential to move the stock in either direction, as the fate of chairman and CEO Jamie Dimon's dual roles may be on the line.
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.