Stocks quoted in this article:
Three of today's most actively traded names among options players are Ford Motor Company (NYSE:F - 10.85), General Electric Company (NYSE:GE - 20.58), and American International Group, Inc. (NYSE:AIG - 32.36). Here is a brief look at some interesting activity we are seeing in these option pits today.
Calls are easily outpacing puts in F today, as eight of the 10 most popular option strikes are of the call variety. One active option is the 11/23 11 call, which will expire at the end of Friday's abbreviated session. Nearly 10,000 contracts have traded versus open interest of under 600 open calls. The large majority of the volume has traded off the ask price, suggesting the positions are being bought to open -- at an average premium of $0.05 each. For the option to be in profitable territory, F needs to surmount $11.05 (strike plus debit paid) by Friday's close. This is a move of about 1.8% from current levels.
Weekly options are also attracting attention in AIG, as the insurance heavyweight is seeing speculators hone in on the 11/23 32 call. The near-the-money call has seen volume of 3,700 on open interest of fewer than 1,000 contracts, implied volatility is higher, and the bulk of the action is trading at or near the ask price. It's easy to conclude, then, that traders are buying to open these short-term bullish bets. The strategy calls for AIG to rally north of $32.64 (strike plus premium) by Friday's 1:00 p.m. close. This would be a shift in short-term momentum for AIG shares. While the stock is up almost 40% in 2012, it has dropped more than 7% so far this month and outperformed the S&P 500 Index (SPX) by nearly nine percentage points during the last 20 sessions (in terms of relative-strength).
The top trade in GE today is a 10,000-contract block of the January 2013 20 put, trading off the bid price of $0.60 apiece. It looks as though these are long puts being sold to close. Similar volume traded in early August at an average price of $1.17 each, so today's action may be the work of speculators limiting losses as the stock tacks on about 2% today. Overall, though, puts still have the power in GE, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.26, which is higher than 88% of the past year's worth of data. Simply, puts expiring in the next three months outweigh calls by a five-to-four margin, and this ratio is notably higher than usual, on a relative basis.
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.