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Most Active Options Update: Facebook Inc (FB), Ford, and Microsoft

FB, F, and MSFT are actively trading in the options pits today

by 12/6/2012 1:32 PM
Stocks quoted in this article:

Three of today's most actively traded names among options traders are Facebook Inc (NASDAQ:FB - 27.50), Ford Motor Company (NYSE:F - 11.23), and Microsoft Corporation (NASDAQ:MSFT - 26.74). Here is a quick look at some interesting trades we are seeing in these option pits today.

On a relative-strength basis, FB has outperformed the S&P 500 Index (SPX) by an impressive 49 percentage points during the last 60 trading days. This has not gone unnoticed by the options crowd, as the 10-day call/put volume ratio at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 3.67, meaning the number of buy-to-open call orders has nearly quadrupled put orders in the past two weeks. Today, however, puts have taken the spotlight. Nearly 16,000 December 26 puts have traded, with 91% going off at the ask price. Implied volatility has moved higher, suggesting at least some of today's speculators are buying to open these bearish positions. As the average premium paid was $0.60, the breakeven at expiration is $25.40, or 7.6% south of current levels.

Call buyers are circling F shares today, scooping up out-of-the-money positions at the February 12 strike. More than 11,000 contracts have traded here today, 97% of which crossed at the ask price. Breakeven at expiration is $12.28, or the strike price plus the average premium paid. Some of this call speculation could be the work of short sellers hedging their bearish bets, however; short interest expanded by 31% over the last four weeks. Ahead of February options expiration is F's next earnings report, which is expected on or around Jan. 22 and could result in volatile price action in the shares.

Finally, MSFT has attracted put speculators to its option pits today, as the February 25 put has seen nearly 8,000 contracts. The lion's share of this volume has traded at the ask price, including one block of 5,000 contracts that changed hands at $0.45 per contract. This was tied to a block of stock, meaning the trader is likely delta hedging to speculate on future volatility versus price action.

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.

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