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Most Active Options Update: Facebook, Yahoo!, and J.C. Penney

FB, YHOO, and JCP are seeing notable options activity today

by 11/15/2012 12:45 PM
Stocks quoted in this article:

Of the 20 equities seeing the most attention among options traders of late, three names catching our eye this afternoon are Facebook Inc (NASDAQ:FB - 22.02), Yahoo! Inc. (NASDAQ:YHOO - 17.90), and J.C. Penney Company, Inc. (NYSE:JCP - 16.70). Here is a brief look at today's interesting option activity in these options pits.

Following a 12.6% post-lockup jump on Wednesday, FB is trading modestly lower today. Option traders, meanwhile, remain notably active in the front-month series. The most-active strike today is the November 22 call, where about 24,000 contracts have traded versus open interest of 41,000. According to information from the International Securities Exchange (ISE), the volume is a mix of buy-to-open and sell-to-close activity. In other words, some traders are closing out of long calls while others are initiating them on the eve of expiration. For the call to be in profitable territory at tomorrow's closing bell, FB needs to be trading above $22.43 (strike price plus average premium paid).

YHOO is outperforming the broader market today, trading in positive territory and pegging a new 52-week high. On the options front, eight of the 10 most active YHOO options today are on the call side, with the January 2013 17.5 call leading the charge. This option has seen about 6,700 contracts trade, about half of which appear to have been purchased to open. In fact, implied volatility on the option has moved more than a percentage point higher. This implies expectations for further upside in the shares between now and mid-January.

Elsewhere, JCP has dropped to its lowest point since March 2009, but call volume is pacing roughly 30% ahead of typical intraday levels. The January 2014 30-strike call has seen about 3,600 contracts change hand, the majority of which traded at the ask price. Implied volatility is slightly higher on the option, suggesting at least some of the activity could be investors buying these far out-of-the-money calls to open in hopes of a long-term recovery in the shares. Delta currently sits at 25%, indicating a one-in-four chance the calls will be in the money once expiration rolls around in about 14 months.

The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.

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