Stocks quoted in this article:
Of the 20 equities with the heaviest options volume in recent sessions, three names of notable interest this afternoon are Intel Corporation (NASDAQ:INTC - 21.10), Research in Motion Limited (USA) (NASDAQ:RIMM - 13.75), and American International Group, Inc. (NYSE:AIG - 35.50). Here is a quick look at today's interesting option activity in these options pits.
With INTC creeping slightly higher to outperform the broader market, put speculators may be jumping ship. The December 21 put has seen more than 18,000 contracts trade today, including one block of 15,000 that traded off the bid price of $0.15 per contract. While this option is only out of the money by a dime, it expires at the close of Friday's trading and will be worth nothing unless INTC drops between now and then. Meanwhile, a block of 10,000 contracts traded on the January 2013 22.50 call at the ask price of $0.19. If this block was purchased to open, it reflects the belief that INTC will continue higher through the next month. Breakeven at expiration for this block would be $22.69 (strike plus premium paid), or 7.5% above current levels.
RIMM earnings are due after the close tomorrow, and option players are trying to prepare. The most active strike so far today is the February 13 put, where nearly 5,900 contracts have changed hands, mostly at or near the ask price. With implied volatility moving 2.7 percentage points higher, it's likely some of these out-of-the-money puts are being bought to open. These bears are taking on a challenging trade; since hitting an annual low of $6.22 on Sept. 24, RIMM has shot impressively higher, gaining more than 120% in the ensuing weeks. Also, RIMM's last trip to the earnings confessional yielded a positive earnings surprise (and a day-after bump of roughly 5%). Currently, the front-month, at-the-money (13.50 strike) straddle trade in RIMM is projecting a move of 11.4% (higher or lower) through this Friday's close.
Put sellers are exiting a large AIG position for a tidy profit, according to data from Trade-Alert. A block of 20,412 contracts at the January 2013 35 put strike was reportedly bought near the ask price of $0.97 per contract, and closes two blocks originally sold to open for $4.15 on Aug. 8 and $2.01 in Oct. 23. On these original trade dates, AIG closed at $32.38 and $34.75, respectively. While selling in-the-money puts can be a risky venture, this particular speculator netted a profit of roughly $4.2 million.
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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