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Option Clips: Citigroup Inc, McDonald's, and American Eagle Outfitters

Reviewing notable options activity on Citigroup Inc, McDonald's Corporation, and American Eagle Outfitters

by 3/11/2014 2:34 PM
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Three stocks generating buzz on StockTwits today are banking giant Citigroup Inc (NYSE:C), fast food titan McDonald's Corporation (NYSE:MCD), and specialty apparel retailer American Eagle Outfitters (NYSE:AEO). Here's a look at how today's option traders have been aligning their wagers on these three names.

  • Range-bound for the last few weeks, Citigroup Inc (NYSE:C) has followed the broader market into the red today, down 1.1% at $49.01. In the options pits, however, longer-term speculators are expressing confidence. The September 55 call is currently the most active strike, and all of the 5,000-plus contracts trading here have done so at the ask price. Volume exceeds open interest, and data from the International Securities Exchange (ISE) confirms that at least some of the calls are being purchased to open, as traders bet on a healthy advance from the shares over the next several months.

  • McDonald's Corporation (NYSE:MCD) shares are bouncing higher today -- up 3% to $98.04 -- after losing some ground on Monday following its sales numbers for February. Option volume is elevated on both sides of the options pits; both call and put volume is running seven times hotter than usual. In response to increased demand, the equity's 30-day at-the-money implied volatility has risen 9.8% to 12.3%. Most active are two short-term plays: the March 95 put and the March 97.50 call, which have seen the slight majority of today's volume trade off the ask price, suggesting buying activity.

  • American Eagle Outfitters (NYSE:AEO) is off more than 7% in mid-afternoon trading at $13.23. Ahead of the open, the retailer announced a sharp pullback in fourth-quarter profit, and warned that first-quarter results may be negatively impacted by winter weather. Speculators have flocked to AEO option pits as a result, particularly on the put side. Put volume has trumped average intraday levels by a factor of 29, and is more than double current call volume. Most active is the out-of-the-money April 12 put, which is seeing some sell-to-open activity, per the ISE. Traders selling these puts are hoping AEO holds above the $12 level through April options expiration in five-plus weeks.


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