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Most Active Options Update: Yahoo!, JPMorgan, and GM

YHOO, JPM, and GM are actively trading in the options pits today

by 11/28/2012 12:11 PM
Stocks quoted in this article:

Three of today's most actively traded large-cap stocks among the options crowd are Yahoo! Inc. (NASDAQ:YHOO - 18.77), JPMorgan Chase & Co. (NYSE:JPM - 40.27), and General Motors Company (NYSE:GM - 24.98). Here is a quick peek at some interesting activity we are seeing in these option pits today.

YHOO traders are extending the life span of their near-the-money calls by selling to close the January 2013 19 calls and buying to open the July 2013 19 calls. Both strikes saw blocks of 5,000 contracts hit the tape in the first hour of trading, with the shorter-term calls trading off the bid price of $0.62 per contract, while the July-strike calls changed hands at the ask price of $1.61 each. As open interest in the July series was just 269 contracts heading into today's session, these will likely translate as new positions. The strategy targets continued upside in the shares and looks for YHOO to move north of $20.61 (strike plus premium paid) by July options expiration. The shares have recently been exploring new annual-high territory, and calls have been popular on YHOO as a result. The 50-day call/put volume ratio measuring buy-to-open activity on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 4.51, or five percentage points shy of an optimistic yearly peak.

JPM is joining the financial sector in the red, but speculators are taking the opportunity to purchase out-of-the-money calls. The February 42 call has seen almost 6,100 contracts trade, versus open interest of 1,575. The large majority of this volume traded at the ask price, and implied volatility has ticked higher. These factors suggest the bullish positions are being bought to open, for a volume-weighted average price of $0.96 per contract. Breakeven at expiration, then, is $42.96, or 6.7% above current levels.

The most-active strike on GM today is the March 26 call, where volume of roughly 7,800 contracts has traded, split between the bid and the ask prices. Implied volatility is slightly elevated at the strike, so it's likely some of the blocks changing hands at the ask price are being purchased to open. Overall call volume on the automaker is handily outpacing puts, 11,000 to 1,800 at midday. Today's action continues a pervasive trend, as the stock's Schaeffer's put/call open interest ratio (SOIR) stands at 0.32, indicating that call open interest in the front three-months' series of options outweighs put open interest by a margin of roughly three to one. What's more, this ratio reading is lower than 97% of the past year's results.

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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