Most Active Weekly Options: Yahoo! (YHOO)

Option traders eye Yahoo! Inc. ahead of Alibaba Group Holding Ltd earnings

Nov 3, 2014 at 2:09 PM
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The 20 stocks listed in the table below are the S&P 500 Index (SPX) components that have attracted the highest weekly options volume during the past 10 trading days. Names 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. One name of notable interest today is Internet issue Yahoo! Inc. (NASDAQ:YHOO), as option traders roll the dice on an Alibaba Group Holding Ltd (NYSE:BABA) halo lift.

Most Active Weekly Options Table

Yahoo! Inc. tagged a fresh 14-year peak of $46.72 earlier, but was last seen 1.1% higher at $46.54. In the stock's options pits, calls are outpacing puts by a nearly 2-to-1 margin, and per the equity's 30-day at-the-money implied volatility (IV), which is up 1% at 31.8%, short-term contracts are in high demand. Drilling down, speculators are wagering on the stock to get an earnings-induced halo lift from Alibaba Group Holding Ltd (NYSE:BABA) -- in which YHOO owns a major stake -- after it takes its inaugural turn in the confessional tomorrow morning.

Specifically, YHOO's weekly 11/14 48.50-strike call has received notable attention, with 5,070 contracts on the tape at last check. The majority of these crossed at the ask price, IV is up 3 percentage points, and only 55 contracts are currently in residence here, making it safe to assume new positions are being purchased.

Based on the volume-weighted average price (VWAP) of $0.47, at-expiration breakeven for today's call buyers is $48.97 (strike plus VWAP) -- territory not charted by YHOO since September 2000. Gains will accumulate on a move north of here, while losses are limited to the initial premium paid, should Yahoo! Inc. (NASDAQ:YHOO) settle south of the strike at next Friday's close, when the weekly series expires.


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