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Most-Active Options Update: Apple, Sprint Nextel, and Caterpillar

AAPL, S, and CAT are seeing notable option trading today

by 10/26/2012 12:44 PM
Stocks quoted in this article:

Of the 20 equities seeing the most-active options volume of late, three equities of special interest today are Apple Inc. (NASDAQ:AAPL - 591.40), Sprint Nextel Corporation (NYSE:S - 5.41), and Caterpillar Inc. (NYSE:CAT - 83.94). Here is a brief look at some option activity we are seeing on these names today.

In the wake of a rare earnings miss, AAPL is trading off 2.5% and is the most-active equity among options traders. Both call and put volume is running at about twice the pace of the already large number typically expected on an intraday basis. Of the 15 most-active strikes, 13 are weekly options expiring at today's close, and all are seeing what appears to be opening activity as extremely short-term investors try to turn a quick profit. The 600-strike put has seen almost 45,000 contracts cross the tape versus open interest of 9,500. The activity looks like a mixture of buying and selling, as speculators wager on the psychologically significant century level.

Once again, S is seeing plenty of activity in the options pits. Speculators are looking slightly longer term today, as the February 4-strike put is in focus. Nearly 45,000 contracts have changed hands versus open interest of 6,400, and much of the volume has traded in several large blocks at or near the ask price at an average of $0.04 per contract. This suggests investors are buying these out-of-the-money puts in hopes of a pretty dramatic backslide in the shares. Some of this volume may be getting rolled out a month from the January 4 put strike, which has seen 25,000 contracts trade today on existing open interest of 39,000.

CAT has shaken off an earlier downgrade and is sitting in positive territory. Put volume is running slightly heavier than normal, with some interest being paid to the December 77.5 put. Almost 2,000 contracts have traded -- eclipsing existing open interest -- nearly all of them at the ask price. This suggests speculators are buying the far out-of-the-money puts to open, for an average premium of $1.27 apiece. In order for the long puts to be profitable, CAT will need to drop below $76.23 by December options expiration in about eight weeks. That is a drop of more than 9% 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 Senior Quantitative Analyst Rocky White.

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