Most Active Weekly Options: Exxon Mobil Corporation and American Airlines Group Inc

How option traders are betting on Exxon Mobil Corporation and American Airlines Group Inc

Dec 23, 2014 at 1:30 PM
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The 20 stocks listed in the table below are the names that have attracted the highest weekly options volume during the past 10 trading days. Those highlighted are new to the list since the last time the study was run, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Among the stocks garnering attention lately are commodities concern Exxon Mobil Corporation (NYSE:XOM) and airline issue American Airlines Group Inc (NASDAQ:AAL), which have taken divergent paths in the wake of crude oil's slump. Let's dig deeper and see how XOM and AAL are faring on the charts, and how traders are placing their bets.

Most Active Options Table

Although black gold is on the mend today, the commodity has tanked recently, due to escalating concerns about supply vs. demand. The drop to multi-year lows is evident in gasoline prices across the nation, as well as on the charts for XOM and AAL.

Since peaking just shy of $105 in late July, when crude was toying with the century mark, XOM has shed roughly 10% of its value to trade at $94.34. Today, however, the shares are up 1.1%, and are on pace to end atop their 80-day moving average for just the second time in nearly five months.

Amid the equity's slide, option traders have grown increasingly bearish. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio has ascended to 2.68 -- in the 98th percentile of its annual range. In other words, option buyers have picked up XOM puts over calls at a much faster-than-usual rate during the past couple of weeks, hinting at growing skepticism.

Among weekly options expiring this Friday, the 91-strike put has garnered the most attention, with nearly 1,500 contracts added during the past two weeks. This strike is now home to more than 7,000 contracts outstanding. Meanwhile, the deeper out-of-the-money 12/26 87-strike put is home to almost 8,400 contracts. Buyers of these puts expect Exxon Mobil Corporation (NYSE:XOM) to settle the week south of the respective strikes.

AAL, on the other hand, has doubled in 2014, and was last seen at $50.70. In fact, just yesterday the airline issue notched a record high of $51.88, as waning oil prices translate into lower-cost fuel for air travel. However, the $50 region represents a roughly 100% year-to-date gain for AAL, and could translate into a roadblock.

AAL's weekly calls have gained traction, with more than 3,000 contracts added to the 12/26 43-strike call during the past two weeks. The closer-to-the-money 12/26 49.50-strike call remains home to peak open interest in the soon-to-expire series, with nearly 7,300 contracts outstanding.

From a broader sentiment standpoint, analysts are also growing increasingly bullish toward American Airlines Group Inc (NASDAQ:AAL). In fact, 11 out of 12 brokerage firms now offer up "buy" or better endorsements, with not a single "sell" in sight. Plus, the equity's consensus 12-month price target of $60.79 stands in uncharted territory, and represents a premium of 20% to the stock's current perch. Should AAL back down or become oversold, the security could be vulnerable to a change of heart among the brokerage crowd.


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