Stocks quoted in this article:
Bullish option activity has been heating up lately on chip stock Advanced Micro Devices, Inc. (NYSE:AMD - 2.49), commodity concern Arch Coal Inc (NYSE:ACI - 7.42), and content delivery specialist Level 3 Communications, Inc. (NYSE:LVLT - 22.72), according to volume data from the major exchanges. In recent sessions, speculative players have shown a distinct preference for calls over puts on AMD, ACI, and LVLT. Here's a closer look at the latest trends in the options pits for these three hot stocks.
First up, options traders have bought to open 4,056 calls and 168 puts on AMD during the past five days, according to the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE). In other words, speculators have purchased 24.14 times more bullish bets than bearish over the past week.
Expanding the scope, AMD has racked up a 10-day call/put volume ratio of 16.81 on the ISE, CBOE, and NASDAQ OMX PHLX (PHLX). This ratio ranks higher than 97% of other such readings taken over the past year, as traders have rarely purchased calls over puts at a faster pace.
AMD is down about 54% so far in 2012, but the stock has recovered from its mid-November lows near the $1.80 level. This rebound has been underlined by AMD's rising 10-day and 20-day moving averages, and the shares are now attempting to find a foothold above the looming $2.50 area.
Turning to ACI, speculators on the ISE and CBOE have bought to open 1,601 calls over the past five sessions, compared to just 158 puts -- netting the stock a bullishly slanted call/put volume ratio of 10.13. In fact, the security's 10-day ISE/CBOE/PHLX call/put volume ratio of 18.92 is now docked at an annual high, implying that options traders have been scooping up calls over puts at their fastest pace of the past year.
With ACI down 50% year-to-date -- and backing down from familiar resistance in the $8 area -- this trend toward bullish options is a little surprising. However, with a healthy 18% of ACI's float dedicated to short interest, it's possible that short sellers are buying calls as hedges, rather than to bet on a forthcoming rally for the beleaguered stock.
Finally, options players on the ISE and CBOE have bought to open 9,592 calls on LVLT over the past five days, compared to only 108 puts. This emphatically bullish bias is also reflected by the stock's 10-day ISE/CBOE/PHLX call/put volume ratio of 67.71, which is hovering in the lofty 94th percentile of its annual range.
Technically speaking, LVLT has rallied sharply from its November lows near $18, but the stock has spent the past week consolidating some gains around the $22.50 neighborhood. The equity's positive momentum stalled out just shy of the $24 level, which is home to resistance from LVLT's 20-month moving average.