Stocks quoted in this article:
Of the 20 equities with the heaviest options volume in recent sessions, three names of notable interest this afternoon are Facebook Inc (NASDAQ:FB - 26.79), Nokia Corporation (ADR) (NYSE:NOK - 4.03), and Intel Corporation (NASDAQ:INTC - 20.75). Here is a quick look at today's interesting option activity in these options pits.
Call volume is roughly doubling put volume in FB shares today, and among the 35,000 calls traded was one block of 1,000 contracts at the January 2013 30 strike that changed hands off the ask price of $0.50. Worth $50,000, this out-of-the-money call is a bet that FB will keep trending higher during the next month. At expiration on Jan. 18, FB will need to close north of $30.50 (strike plus premium paid) in order to make this trade a profitable one. (Of course, the call buyer can close out of the position at any time between now and then.) This call currently has a delta of 27%, giving it a roughly one-in-four chance of expiring in the money. We've seen an uptick in call speculation in FB lately; the stock's Schaeffer's put/call open interest ratio (SOIR) has dropped off from an annual high of 1.58 -- recorded in mid-November -- to its current reading of 1.18.
Bears are continuing to bet against NOK, and today's option of choice is the January 2014 3-strike put, which has seen more than 14,000 contracts trade, three-quarters of which crossed at the ask price. The volume has consisted of several large blocks (around 1,000 contracts) that changed hands shortly after the opening bell. Meanwhile, data from the International Securities Exchange (ISE) suggests some of these are being purchased to open. At a volume-weighted average price (VWAP) of $0.53, this LEAPS play is a bet that NOK slides sharply lower during the next 13 months. Breakeven at expiration would be $2.47 (strike minus premium paid), a drop of 39% from current levels. The shares are up nearly 150% from their July 18 annual low of $1.63, so perhaps these far-sighted bears are projecting consolidation between now and next January. There is plenty of upside potential for the shares, however, which are still trading 45% below their annual high.
INTC is also seeing some bearish speculation, with put buyers focused on the March 20 put. Nearly 8,400 contracts have traded at this strike, compared to open interest of just 3,145. Implied volatility has ticked slightly higher, and nearly all of the volume has traded at the ask price, suggesting the puts are being bought to open. The breakeven price at expiration -- based on the VWAP of $0.80 -- is $19.20, which is just south of the stock's annual low of $19.23 hit on Nov. 21.
The 20 stocks below have attracted the highest options volume -- in the front three-months' series -- during the past 10 trading days. Data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White.