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 Groupon Inc (NASDAQ:GRPN), Bank of America Corp (NYSE:BAC), and Microsoft Corporation (NASDAQ:MSFT). Here is a quick look at today's interesting activity in these options pits.
A large-scale trader may be returning to the Groupon Inc well, as a large block of out-of-the-money calls has again been sold to open, according to information from Trade-Alert. The same strike that was in focus yesterday -- the January 2014 10-strike call -- is under the spotlight once again and is far and away the most active strike overall. A block of 12,553 contracts traded near the bid price, at $0.55 per contract, making the entire block worth nearly $700,000 (the number of contracts times the premium, times 100 to account for the shares each contract represents). If GRPN is trading below this strike when expiration rolls around in seven months, the call will expire worthless and the call seller will keep the premium as profit. GRPN is advancing toward this strike today, up 3.9% to $7.26, but has another 38% to go before these calls are in the money.
Options traders are playing both sides of the fence today in Bank of America Corp, with one aggressive investor targeting a short-term bounce via the weekly 5/24 14-strike call. More than 8,200 of these calls have traded today -- 85% at the ask price -- and implied volatility is moving higher, suggesting at least some of the options are being purchased to open. Delta on this short-dated call is just 0.09, giving the option a 9-in-10 chance of expiring worthless at Friday's close. Elsewhere, the June 14 puts are active today, as the stock sits fractionally lower, at $13.49. Of the more than 6,000 put options trading here, 93% have crossed at the ask price, indicative of possible buyers. For the put buyer to be in profitable territory at expiration, BAC would need to be trading below $13.25, or the strike price less the volume-weighted average price (VWAP) of $0.75.
Finally, Microsoft Corporation is trading off 0.3% at $34.99 today, but is seeing some notable attention at its June 38 call. Nearly 2,300 contracts have traded (exceeding open interest), implied volatility is higher, and almost all of the volume has crossed at the ask price. In short, it appears that MSFT bulls are opening new positions here for a VWAP of $0.06. Delta on this call is just 0.07, giving it a slim chance of being in the money by the time options expire in less than five weeks. Still, these call buyers have risked only the premium paid, should they hold the positions through expiration and MSFT is unable to overcome the strike price.
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.