AOL Inc. (AOL) Call Buyers Place Optimistic Bets

AOL, Inc.'s (AOL) May 42 call is seeing buy-to-open action

by Alex Eppstein

Published on Apr 16, 2015 at 1:47 PM
Updated on May 5, 2015 at 8:45 AM

AOL, Inc. (NYSE:AOL) is off 0.5% this afternoon at $39.62, but options traders remain optimistic -- as they have been on a number of Internet names. At last check, calls were flying off the shelves at 18 times the usual intraday pace, and the stock's 30-day at-the-money implied volatility has soared 14.2% to 48.5%, indicating elevated demand for short-term strikes.

Seeing the most action by far is the May 42 call, where more than 4,500 contracts have changed hands. All signs point to buy-to-open activity, meaning speculators anticipate AOL will take out $42 by the close on Friday, May 15, when the soon-to-be front-month options cease trading.

Along similar lines, the stock's Schaeffer's put/call open interest ratio (SOIR) sits at an annual low of 0.23. In other words, call open interest outweighs put open interest by a historic margin, among options expiring in the next three months.

However, not everyone's so confident in AOL. Over half of the analysts tracking the shares consider them a "hold" or worse. Also, 5.5% of the equity's float is sold short, representing almost five times its typical daily trading levels.

Technically speaking, AOL, Inc. (NYSE:AOL) is on pace for a second straight finish above its 20-day moving average -- the first time that's happened since mid-March. What's more, it appears the 10- and 20-day trendlines are on the verge of a bullish cross, which is promising in the short term. If AOL can capitalize on this technical set-up, a round of upgrades and/or short-covering activity could provide a tailwind.


A Schaeffer's exclusive

TOP STOCK PICKS 2020

Access your FREE insider report before it's too late!


 
 

Partnercenter


NEW! Explore Schaeffer’s Partners' deals and get connected to top online brokerages with deals tailored exclusively for our readers.  Get answers to your questions regarding transfer fees, commission rates, programs and available discounts related to online trading services.

MORE | MARKETstories


IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.
Stocks Eye Notable Weekly Gains on 3-Day Surge
Stocks are eyeing big weekly gains
WW Stock Brushes Off Bull Note
Morgan Stanley upgraded the Weight Watchers parent to "overweight" from "equal weight"
IRA/401k: The Crash-Proof Retirement Plan
Use gold to protect any IRA, 401(k), or retirement account from a looming financial crisis.