Stocks quoted in this article:
Three of today's most actively traded names among the options crowd are Facebook Inc (NASDAQ:FB - 28.13), Cisco Systems, Inc. (NASDAQ:CSCO - 19.15), and Ford Motor Company (NYSE:F - 11.57). Here is a quick look at some interesting activity we are seeing in these option pits today.
As FB continues to trek higher, speculators are trying to jump in on the action. So far today, about 230,000 call options have traded, triple the typical intraday call volume. By comparison, roughly 91,000 puts have changed hands. The most active strike is the December 29 call, where almost 25,000 contracts have traded, two-thirds at the ask price. Implied volatility has zoomed nearly nine percentage points higher, indicative of new buying activity. The breakeven price at expiration -- based on today's volume weighted average price of $1.02 per contract -- is $30.02 (strike plus premium paid). FB shares have rallied nearly 50% from their Nov. 12 intraday low and have outperformed the S&P 500 Index (SPX) by 32 percentage points during the last month.
CSCO is also seeing lots of call volume today, but the bulk of the activity has likely been initiated by sellers. Today's volume on the December 20 call has reached 55,000, topping existing open interest of 40,000. Around 10:00 a.m. Eastern, two blocks of 20,000 contracts each changed hands -- one at the bid price and one between the bid and the ask. It is possible this is the work of CSCO shareholders employing the covered call strategy ahead of December options expiration. The premium collected is small -- roughly a nickel per contract -- but it suggests a willingness of CSCO shareholders to unload their large holding in the stock at the $20-per-share price point.
F is shaking off news of two recalls and benefiting from a 6.5% jump in new-vehicle sales during November. The stock is trading modestly higher, and speculators have turned their attention to the weekly option pits. Nearly 7,000 positions have traded on the 12/7 11.5 call, 81% of which have gone off at the ask price. Meanwhile, implied volatility on the near-the-money option has surged almost six percentage points higher. These call buyers are expecting F to be trading north of the $11.75 (strike plus average premium) level when the options expire at Friday's closing bell.
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past two weeks. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.