Option Bulls Keep a Close Eye on American Express Company (AXP)

American Express Company (AXP) traders are buying to open front-month calls today


Published on Feb 17, 2015 at 1:51 PM
Updated on Apr 20, 2015 at 5:32 PM

American Express Company (NYSE:AXP) touched an annual low of $77.12 earlier, but has since rebounded, last seen up 0.5% at $78.51. This morning's struggles may have been due to a price-target cut to $92 from $100 at Goldman Sachs yesterday, although the brokerage firm did reiterate its "buy" rating. The company was already coming off a week where it ended relationships with Costco Wholesale Corporation (NASDAQ:COST) and JetBlue Airways Corporation (NASDAQ:JBLU). Today, options traders are stepping up to the plate, with overall volume running at twice the typical intraday rate.

Some bullish traders are targeting the February 78 and 78.50 calls, as buy-to-open activity has taken place at each strike. These traders are hoping for AXP to buck the recent downtrend, and rally above the respective strikes before the close this Friday, when front-month options expire.

Judging from data at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), many traders are hoping for AXP to rebound. The stock's 10-day call/put volume across those exchanges comes in at 2.57 -- higher than 94% of all other readings in the past year. In short, speculators have bought to open AXP calls over puts at an accelerated clip.

As was mentioned, American Express Company (NYSE:AXP) has struggled of late. Since touching a 2015 high of $93.94 on Jan. 2, the shares have lost over 16%. As such, bullish options traders may in luck. AXP's 14-day Relative Strength Index (RSI) is sitting at 29 -- in oversold territory -- suggesting a short-term bounce could be in the cards.

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