Most Active Weekly Options: Yahoo! Inc. (YHOO)

Put traders are divided on Yahoo! Inc.'s short-term trajectory


Published on Nov 10, 2014 at 11:25 AM
Updated on Apr 20, 2015 at 5:32 PM

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. One name of notable interest today is Yahoo! Inc. (NASDAQ:YHOO), where traders are rolling the dice on the stock's end-of-week direction.

Most Active Weekly Options Table

Yahoo! Inc. has raced to another 14-year high this morning, topping out at $49.63. At last check, the shares are 2% higher at $49.50, despite Wells Fargo resuming coverage of the equity with a lukewarm "market perform" rating.

Not surprisingly, options activity has been strong -- especially on the put side, where intraday volume nearly triples the expected amount. It appears short-term traders are busy, too, as YHOO's 30-day at-the-money implied volatility has jumped 3.2% to 30.4%.

The two most active options are the weekly 11/14 49- and 48.50-strike puts. Volume on the former is evenly split between the bid and ask prices, signaling seller- and buyer-driven activity, respectively. What's more, volume has topped open interest, suggesting freshly minted positions. Stated simply, the put writers anticipate YHOO will remain above $49 through week's end -- when the series expires -- while the buyers expect the stock to tumble below the strike over the next five days.

Meanwhile, the weekly 11/14 48.50-strike put is mostly being sold to open. Like the aforementioned put writers, these traders are banking on short-term technical support for shares of YHOO. However, they're giving themselves a little extra leeway by targeting a deeper out-of-the-money strike. To put this in perspective, the 49-strike put has a delta of negative 0.40, while the 48.50-strike put has a delta of negative 0.28, suggesting a lower probability of the option being in the money at expiration.

Elsewhere, Alibaba Group Holding Ltd (NYSE:BABA) -- of which Yahoo! Inc. (NASDAQ:YHOO) owns a major stake -- is gearing up for tomorrow's "Singles Day" shopping frenzy. Ahead of this event, weekly BABA calls are being targeted.

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