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Most Active Options Update: Ford Motor Company (F)

F is seeing notable options trading today

by 8/16/2013 3:03 PM
Stocks quoted in this article:

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. Three names of notable interest this afternoon are Ford Motor Company (NYSE:F), BlackBerry Ltd (NASDAQ:BBRY), and J.C. Penney Company, Inc. (NYSE:JCP).

BBRY has shed roughly 4%, as Wall Street weighs the uncertainty surrounding the company's future. A number of speculators are betting on a quick rebound over the next week, and are buying to open the weekly 8/23 11-strike call. Meanwhile, JCP's volatile trading continues, with the stock down 2.5%. Unlike yesterday's bears, some option traders in today's session are eyeing an end to the bleeding by selling to open the weekly 8/23 9-strike puts. Elsewhere, here is a quick look at the interesting activity in F's options pits.

Most

Ford Motor Company (NYSE:F) is following in the bearish footsteps of the broader equities markets, with the shares off 1.2% at last check to trade at $16.23. Thanks to this week's roughly 4.6% drop, the equity is at risk of violating its 10-week moving average for the first time since late April, on a weekly closing basis. Not surprisingly, puts are trading at a 48% mark-up to their expected intraday volume. However, looking deeper into the data reveals that not all of this put activity is of the traditional bearish sense. One of the more popular trades on the day is the weekly 8/30 16-strike put, which has seen 2,501 contracts change hands for a volume-weighted average price of $0.12. Nearly all of these out-of-the-money puts have gone off on the bid side, and volume is outstripping open interest, suggesting a number of these options are being sold to open. Ideally, F will maintain its perch north of $16 over the next two weeks. In this best-case scenario, the puts will expire worthless, and the traders will retain the initial premium collected as the maximum potential reward on the play. Should F breach the strike price ahead of the Aug. 30 close, these put writers may be required to buy the shares at $16 apiece, regardless of where the stock is trading.

Puts have been growing in popularity in F's near-term options pits. Since July 22 (the first day of this soon-to-expire cycle), put open interest among options expiring in three months or less has increased more than 10%. According to data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the preference has been toward short puts. Specifically, during the course of the past 20 sessions, traders at these exchanges have sold to open 1.5 times more F puts than they've purchased.


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