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Most Active Options Update: Microsoft, AIG, and Citigroup

MSFT, AIG, and C are seeing notable option volume today

by 11/2/2012 12:21 PM
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Of the 20 equities seeing the most-active options activity over the course of recent weeks, three names seeing notable trading today are Microsoft Corporation (NASDAQ:MSFT - 29.57), American International Group (NYSE:AIG - 33.16), and Citigroup Inc. (NYSE:C - 37.73). Here is a brief look at interesting option volume we are seeing in the option pits today.

MSFT's Surface tablet may have gotten a vote of confidence from Oprah Winfrey today, but the stock is not really budging. Option players, meanwhile, are active at the November 30 put strike, with almost 24,000 contracts trading, representing more than half of the stock's total put volume so far today. Volume exceeds open interest, so at least some of this action is happening on the opening side. One block of 16,931 contracts went off above the ask price at $0.97 per contract, suggesting it was purchased. If so, traders anticipate downside in MSFT through the next two weeks. Breakeven at expiration is $29.03, or the strike price less the premium paid.

Reaction to AIG earnings has not been positive; the stock is down almost 6% and option traders are seeing this pullback as an opportunity. The January 2013 33-strike put has seen volume of roughly 11,000 today on open interest of just 6,900. The large majority of the volume has traded off the bid price, suggesting these (barely) out-of-the-money puts are being sold to open -- for an average of $1.50 per contract -- on a bet that AIG will not be trading south of the $33 level come January expiration.

C, which went ex-dividend yesterday, is seeing some action in the 11/9 weekly option series (which expires a week from today). The 39- and 39.5-strike calls are seeing volume of 5,400 and 4,500, respectively. It looks as though traders may be selling the lower-strike calls and buying the higher-strike options -- which would collectively be a bearish credit spread -- but the volume appears unrelated. Also in focus is the slightly longer-term November 39 call, which may be seeing some buy-to-close volume today.

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 Quantitative Analyst Chris Prybal.



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