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Most-Active Options Update: Facebook, Intel, and General Electric

FB, INTC, and GE are seeing notable option trading

by 10/24/2012 1:14 PM
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Among the 20 equities seeing the most-active options volume of late -- see below for further clarification -- three names of note today are Facebook Inc (NASDAQ:FB - 23.45), Intel Corporation (NASDAQ:INTC - 21.52), and General Electric Company (NYSE:GE - 21.30). Here is a brief look at some interesting option activity we are seeing on these equities today.

FB is trying to make a dent in its post-IPO loss, shooting about 20% higher today on the heels of a better-than-expected earnings report. The stock is now the most-active equity in the options pits, with both call and put volume running more than five times heavier than the daily norm. One interesting trade is an apparent roll up of 5,000 weekly positions (expiring on Friday) from the 21.5 strike to the 23.5 strike. The lower-strike options traded closer to the bid price earlier today while the 23.5-strike calls traded near the ask price at $0.64 per contract, with volume surpassing open interest. This long call play looks for FB to be trading north of $24.14 by Friday's close.

Knocked off the U.S. focus list at Credit Suisse, INTC continues to amplify its year-to-date loss of 11%. Despite this pullback, the stock is seeing a lot of attention at the January 2013 21-strike call today, with more than 27,000 contracts trading versus open interest of fewer than 5,600 contracts. Several mid-sized blocks have changed hands at or near the ask price -- in fact, 80% of all volume at the strike today has gone off at the ask. This is indicative of call buying and is reflective of the opinion that INTC will be trading north of $22.19 (strike price plus $1.19 average premium paid) when the options expire in less than three months. This call buying is a departure from existing sentiment; the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.15 shows that puts outweigh calls among options with three or fewer months until expiration; what's more, this ratio is higher than 93% of all readings taken during the past year.

Finally, GE is hovering around breakeven today but boasts a positive 52-week return of 31%. Today, the near-the-money, 21-strike put set to expire on Friday has seen roughly 6,800 contracts trade on open interest of 4,580. The majority of this volume has traded off the bid price, suggesting they may be sold to open. If GE is still trading north of $21 at Friday's closing bell, put sellers will keep the modest premium collected as profit, as the put will expire worthless. While today's action has been on the sell side, speculators have taken interest in long puts of late. The 10-day put/call volume ratio of 0.84 -- measuring buy-to-open activity at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- is higher than 90% of the past year's results, suggesting that speculators have been more put-heavy than usual in the past two weeks.

The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past two weeks. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.



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