Stocks quoted in this article:
Among today's most actively traded names in the options pits are Facebook Inc (NASDAQ:FB - 27.33), Ford Motor Company (NYSE:F - 11.10), and The Walt Disney Company (NYSE:DIS - 48.80). Here is a quick look at some interesting option trades we are seeing on these names today.
In addition to heavy activity in today's expiring weekly options series, FB is attracting short-term traders to the December 27.5 call strike. Nearly 9,000 contracts have already changed hands, versus sparse open interest of 333. The lion's share of this volume traded off the ask price, indicating the options are being purchased to open. Given the volume-weighted average price of $0.76 per contract, the breakeven price at expiration is $28.26 (strike plus premium paid), or 3.4% above current levels. Although call volume easily exceeds put volume in today's session, overall open interest across the next three months remains tilted toward the put side, as evidenced by the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.28.
F is also seeing front-month action, as more than 2,000 contracts have traded on the December 11.5 call, which came into today's session with fewer than 800 contracts in open interest. While the activity appears to be a mixture of buying and selling, the narrow majority of trades have gone off at the ask price, implying some buy-to-open activity. An increase in implied volatility at this strike supports this theory. As the strike is 3.6% away one week before expiration, these calls have a low price tag of $0.06 (on average), making breakeven at the Dec. 21 close $11.56. Calls have been popular of late in F even as the stock has dropped more than 3% so far this month. The 10-day call/put volume ratio of buy-to-open activity on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands at 3.15, indicating calls have been bought to open at more than triple the pace of puts during the last two weeks.
Finally, call buyers are thinking longer term with regard to DIS, as the April 50 call has come into focus. This is easily the most active strike today, with nearly 2,800 contracts changing hands, almost two-thirds of which have traded at the ask price. Additionally, the ISE points to at least some of this volume as buy-to-open activity. Breakeven for these calls at expiration in roughly four months is $51.94, based upon the volume-weighted average price. DIS would need to move nearly 6.5% higher from its current perch to render these positions profitable by expiration. Today's activity notwithstanding, the equity's SOIR is one percentage point shy of an annual peak, suggesting recent pessimistic posturing on the part of short-term option traders.
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.