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Most Active Options Update: Intel, Ford Motor, and AIG

INTC, F, and AIG are seeing notable option volume today

by 11/7/2012 12:34 PM
Stocks quoted in this article:

As the market processes the election results by plunging into the red, three heavily traded names seeing attention from the options crowd are Intel Corporation (NASDAQ:INTC - 21.02), Ford Motor Company (NYSE:F - 11.07), and American International Group, Inc. (NYSE:AIG - 32.21). Here is a brief look at some activity we are seeing in these option pits today.

Traders are hoping to secure a quick profit via weekly INTC options today, and apparently sold blocks of the 21.50-strike puts (expiring on Friday) shortly after the open. In all, roughly 7,000 contracts have traded at this strike, versus open interest of under 3,900. The activity suggests the belief that INTC will be trading north of the strike price when expiration occurs at the end of the week. The shares have dropped close to 3.5% today, violating this level in the process. Put sellers risk assignment of the underlying shares, and therefore are exposed to all risk down to zero, if required to purchase the stock at the sold strike price.

F shares are following the market into the red and have given back more than 2.5% today to land in negative territory on a year-over-year basis -- despite recent outperformance of the broader market on a relative-strength basis. One of the most-active F option today is the January 2014 10-strike call, which saw a block of 9,900 contracts trade off the bid price at $1.98 each. Traders may be closing out of these LEAPS positions, as a similarly large block was evidently bought to open for $1.73 per contract in mid-September. While there is still ample time value remaining in these positions, investors may be choosing to take their bets off the table at a slight profit, given today's market drop.

Finally, AIG is back in focus, as more than 10,000 contracts have traded on the January 2013 36-strike call, the large majority of which traded at or near the ask price. With open interest significantly higher than this volume, we cannot determine whether the action is buying or selling. Given that implied volatility is up more than three percentage points, though, this could be the work of call buyers swooping in on a pullback. Breakeven on this position would be $36.49 (strike plus premium paid) at expiration on Jan. 18.

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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