Most Active Weekly Options: Twitter, Inc. (TWTR) and Apple Inc. (AAPL)

Short-term option bulls circle Twitter Inc (TWTR) and Apple Inc. (AAPL)

Jan 22, 2015 at 1:56 PM
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The 20 stocks listed in the table below have attracted the highest total 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 microblogging concern Twitter Inc (NYSE:TWTR) and iPhone titan Apple Inc. (NASDAQ:AAPL), which are popular among short-term option bulls today.

Most Active Options Table

On the charts, both stocks have lagged the broader S&P 500 Index (SPX) during the past couple of months. However, TWTR is flirting with a year-to-date gain of roughly 9%, and could topple its 60-day moving average for the first time since late October. This trendline contained the stock's pullbacks on several occasions in the latter half of 2014, so a close north could be significant. At last check, TWTR was up 3.2% at $39.04.

Daily Chart of TWTR since June 2014 with 60-Day Moving Average

In the options pits, TWTR calls are running at nearly twice the average intraday clip, and are outpacing puts by a margin of more than 4-to-1. The equity's 30-day at-the-money implied volatility has popped 3.5% to 69%, underscoring the growing appetite for short-term contracts.

Digging deeper, it looks like very short-term bulls are buying to open the weekly 1/23 39- and 40-strike calls, amid hopes for TWTR to continue its ascent -- and topple the strikes -- by tomorrow's close, when the weekly series expires. Slightly longer-term (yet definitely more aggressive) bulls are buying to open the weekly 2/13 50-strike calls, which will move into the money if TWTR conquers $50 -- territory not charted since late October -- by the close on Friday, Feb. 13. These options encompass Twitter's next earnings report, slated for release after the close on Thursday, Feb. 5.

TWTR has been to the earnings confessional four times, and has retreated in the subsequent session thrice. The stock's lone post-earnings victory came in late July, when TWTR skyrocketed 20% the day after reporting.

Today's affinity for bullish bets merely echoes the recent trend, though. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Twitter Inc's (NYSE:TWTR) 50-day call/put volume ratio of 2.55 stands higher than 92% of all other readings from the past year.

AAPL was last seen 1.6% higher at $111.30, clawing its way into the black for 2015. However, since notching an all-time high of $119.75 in late November, the shares have surrendered more than 7%, with recent rebound attempts halted at their formerly supportive 10-week moving average.

Weekly Chart of AAPL since April 2014 with 10-Week Moving Average

In early afternoon action, weekly options account for eight of the 10 most active contracts. What's more, calls are outpacing puts by a margin of more than 2-to-1, with possible buy-to-open activity detected at the weekly 1/23 110-, 111-, and 112-strike calls. By buying the calls to open, the traders expect AAPL to finish the week north of the strikes.

Meanwhile, it looks like some speculators are gambling on a post-earnings pop for AAPL next week, buying to open the weekly 1/30 110-strike calls. The company will unveil its quarterly figures after the close on Tuesday, and an earnings miss could disappoint quite a few folks on the Street.

The stock's 50-day ISE/CBOE/PHLX call/put volume ratio of 2.39 stands higher than 72% of all other readings from the past year, hinting at a healthier-than-usual appetite for bullish bets of late. Likewise, in the wake of January 2015 options expiration last week, the equity's Schaeffer's put/call open interest ratio (SOIR) plummeted to 0.53 -- in the 6th percentile of its annual range. In other words, short-term option players have rarely been more call-biased during the past year.

Echoing that, 25 out of 32 analysts maintain "buy" or better opinions on Apple Inc. (NASDAQ:AAPL), with not a "sell" in sight. The consensus 12-month price target of $123.33 sits in uncharted territory, too. Should the Silicon Valley bigwig disappoint next week, an unwinding of optimism in the options arena, or a bout of downgrades and/or price-target cuts, could exacerbate recent selling pressure on the shares.


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