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Most Active Options Update: Yahoo!, AIG, and Bank of America

YHOO, AIG, and BAC are seeing notable option volume today

by 11/5/2012 1:41 PM
Stocks quoted in this article:

Of the 20 equities posting the heaviest options volume during the past two weeks, three names seeing notable options activity today are Yahoo! Inc. (NASDAQ:YHOO - 17.17), American International Group (NYSE:AIG - 32.74), and Bank of America Corp (NYSE:BAC - 9.70). Here is a brief look at interesting option volume we are seeing in these option pits today.

Even with YHOO reaching another annual trading high today, option players are assuming a bearish course of action. The December 16-strike put has seen 4,800 contracts trade today (easily outpacing open interest), and 99% of the volume has changed hands at or near the ask price. These put buyers are betting on a pullback in the shares between now and December 21, as the breakeven point (at expiration) is $15.85, or the strike price less the average premium paid ($0.15 per contract).

Meanwhile, AIG is seeing some action once again, and it is a three-legged, moderately bearish strategy in play. It appears as though an investor has purchased 10,000 February 30 puts and simultaneously sold 10,000 of the February 34/38 call spreads, collecting an overall net credit of $0.06. This strategy suggests the belief that AIG will move lower over the next three months, but protects against any unexpected upside north of $38. Together, these strikes comprise slightly more than one-third of the total option volume in AIG today (88,000 contracts).

Finally, BAC has attracted some attention to its weekly 9.5-strike put, with more than three-quarters of the trades going off at the ask price. More than 27,000 contracts have traded on this near-the-money strike, versus open interest of 5,300. The average premium paid for these puts has been $0.11 per contract, making the breakeven price $9.39 at Friday's close. This is a drop of 3.2% from current levels.

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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