Stocks quoted in this article:
Three equities drawing attention from options traders today are video game retailer GameStop Corp. (NYSE:GME), global gaming concern International Game Technology (NYSE:IGT), and construction supplies provider Fastenal Company (NASDAQ:FAST). Here's a look at how traders have been aligning their speculative bets today.
- GameStop Corp. (NYSE:GME) has shed more than 18% today to wallow near $37.10, after a dreary fourth-quarter outlook prompted a pair of price-target cuts from SunTrust and Credit Suisse and landed the equity on the short-sale restricted list. As such, put volume has soared to seven times the average intraday pace, and the January 2014 36-strike put is the most sought-after position thus far. However, the majority of the 3,980 contracts traded have done so at the bid price, volume outstrips open interest, and data from the International Securities Exchange (ISE) confirms sell-to-open activity. In other words, these traders are betting on GME to maintain its perch atop $36 through this Friday's close -- when front-month options expire.
- International Game Technology (NSYE:IGT) calls are trading at more than eight times the typical intraday rate today, causing IGT's 30-day, at-the-money implied volatility (IV) to jump 10.2% to 45.5%. Traders scooping up January 2014 17-strike calls are eyeing additional gains through week's end, as the vast majority of the 7,661 contracts traded changed hands on the ask side. IV has soared 10.4 percentage points, and volume exceeds current levels of open interest, indicating the initiation of a fresh batch of bullish bets. IGT is up 1.8% this afternoon to trade at $17.25.
- Ahead of tomorrow's early morning turn in the earnings confessional, Fastenal Company (NASDAQ:FAST) has tacked on 1.8% to hover around $48.31. One of the more popular positions in FAST's options pits is the February 48 call, where 1,321 contracts have changed hands --mostly at the ask price. IV is higher, and volume surpasses open interest, pointing to buy-to-open activity. Based on present trading levels, these calls are in the money; however, in order for call buyers to profit, the stock must rise above breakeven at $49.81 (strike plus the volume-weighted average price of $1.81) before the close on Friday, Feb. 21, when back-month options expire.