Stocks quoted in this article:
The 20 stocks listed in the table below are the S&P 400 MidCap Index (MID) components that have attracted the highest total options volume during the past 10 trading days. Names highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. One name of notable interest today is J C Penney Company Inc (NYSE:JCP), which has seen heavy call-buying activity at one short-term strike.
J C Penney Company is up 0.7% this afternoon to trade at $10.93, and option traders are betting the shares will soon make another push to topple the 11 strike. Specifically, the stock's weekly 10/10 11-strike call is in focus, with nearly 5,400 contracts on the tape so far. Over 90% have crossed at the ask price, and volume outstrips open interest, making it safe to assume the calls are being bought to open at a volume-weighted average price (VWAP) of $0.51.
Based on the above, at-expiration breakeven works out to $11.51 (strike plus VWAP), with theoretically infinite profit potential on a move higher in the underlying. Conversely, the speculators risk parting with the initial premium paid, should JCP finish below the strike at the close on Friday, Oct. 10, when the weekly series ceases trading.
Taking a step back, shares of the retailer have been struggling in the $11 area since late August. Some of this resistance may be due to the fact that the strike is home to peak call open interest in the September, weekly 9/26, and weekly 10/10 series of options. However, the options market is still giving the call about a 1-in-2 chance of an in-the-money finish, based on the delta of 0.51.
Honing in more closely on technicals, J C Penney Company (NYSE:JCP) has rallied nearly 20% in 2014, and has outperformed the broader S&P 500 Index (SPX) considerably in recent months. However, a rally north of $11.51 would represent a new year-to-date high for the stock, which hasn't topped $11.30 since the year began.