Stocks quoted in this article:
Among the 20 equities seeing the most-active options volume of late, three names of note today are Intel Corporation (NASDAQ:INTC - 20.53), Microsoft Corporation (NASDAQ:MSFT - 27.14), and Cisco Systems, Inc. (NASDAQ:CSCO - 85.01). Here is a brief look at some interesting option activity we are seeing in these options pits this afternoon.
As INTC retreats to another new annual low, traders have zeroed in on the December 22 call. More than 17,000 positions have traded, compared to open interest of 30,000. Nearly all of the volume has traded at the ask price, however, and implied volatility is up more than one percentage point, suggesting these out-of-the-money calls could be trading to open. If so, investors are trying to catch a proverbial falling knife as they bet on INTC to bounce back to $22.18 (strike plus average premium paid) by December options expiration.
While shareholders digest news of a high-profile departure among the MSFT ranks, the stock goes ex-dividend today. The 23-cent-per-share payout is reflected in the share price, and therefore inspires an influx of options volume. Notable today is the January 30 call, where more than 26,000 contracts have changed hands. Some large blocks are trading off the bid price, and may be selling to open as traders project MSFT will be unlikely to surmount the $30 level in the next two months.
Finally, with earnings due tonight, CSCO options are seeing an annual high in implied volatility. Meanwhile, traders seem to be bailing out of their bearish bets. The December 15 put has seen nearly 12,000 contracts trade off the bid price, and implied volatility at this particular strike is moving lower. Elsewhere, the December 16 call has seen volume of roughly 8,400 contracts on open interest of about 3,000. The majority of these in-the-money calls are trading off the ask price, suggesting they are being purchased to open. Both of these strategies -- closing out of long puts and buying to open long calls -- suggest optimism (or at least a lack of pessimism) heading into the earnings report.
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.