Stocks quoted in this article:
The 20 stocks listed in the table below 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. Three names of notable interest this afternoon are Yahoo! Inc. (NASDAQ:YHOO), Citigroup Inc (NYSE:C), and Microsoft Corporation (NASDAQ:MSFT).
Citigroup Inc is trading lower today, following an early morning downgrade. As such, put volume in C's options pits is running at a modest mark-up to the average intraday pace. Elsewhere, Microsoft Corporation calls are trading at four times the expected clip this afternoon, and some of the activity is the result of spread strategies being initiated in the December and January series. Finally, here's a closer look at how Yahoo! Inc. traders are reacting to today's technical milestone.
Yahoo! Inc. ran to its highest perch since January 2006 earlier, after bouncing sharply off its rising 10-day moving average earlier this week. Despite YHOO flexing its technical muscle, puts have gained in popularity today, and are trading at two times the average intraday volume. The most sought-after position among this group of option players is the stock's January 2014 34-strike put. Nearly 22,000 contracts have changed hands here -- including a large block of 7,557, which Trade-Alert suggests could be part of a ratio risk-reversal strategy -- mostly at the ask price. Implied volatility is up 2.7 percentage points at the strike, and volume easily outstrips open interest, pointing to buy-to-open activity.
By purchasing the puts, the expectation is for YHOO to fall south of the strike price over the next six-plus weeks. This would require a drop of 12.5% from the stock's current perch at $38.85. Given the magnitude of this required move, delta for the put is resting at negative 0.12, suggesting a slim 12% chance of an in-the-money finish.
As touched upon, Yahoo! Inc. (NASDAQ:YHOO) is having a stellar day on the charts, but today's positive price action only highlights the equity's withstanding technical might. In fact, the shares are up more than 95% year-to-date. In light of this, some of today's put buying at the out-of-the-money strike could be shareholders hedging against a near-term consolidation.