Most Active Options Update: Alibaba Group Holding Ltd and Facebook Inc

Call buyers are making a rare appearance on Alibaba Group Holding Ltd (NYSE:BABA) and Facebook Inc (NASDAQ:FB) today

by Karee Venema

Published on Oct 12, 2015 at 2:10 PM
Updated on Jun 24, 2020 at 10:16 AM

The 20 stocks listed in the table below have attracted the highest total 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. Two names of notable interest are e-commerce concern Alibaba Group Holding Ltd (NYSE:BABA) and social network Facebook Inc (NASDAQ:FB).

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BABA has tacked on 2.3% today to trade at $70.30 -- paring its year-to-date deficit to 32.4% -- following a big stimulus-related boost from overseas and a positive mention in Barron's. Although overall volume -- as expected -- is light, option traders are showing a preference for calls over puts in today's trading, with a number of speculators buying to open the October 70 call. In other words, these traders are hoping for a bigger rally through week's end, when front-month options expire.

More broadly speaking, it's been put buyers who have been active in BABA's options pits in recent months. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day put/call volume ratio of 0.85 sits just 3 percentage points from a 52-week peak.

Receiving notable attention has been Alibaba Group Holding Ltd's October 60 put, which has seen 26,257 contracts cross the tape in the last two weeks. According to the ISE, CBOE, and PHLX, nearly 10,400 new positions have been purchased here since late July, meaning traders have been betting on BABA to be sitting south of $60 at this Friday's close. Regardless of where the security settles, though, the most the put buyers stands to lose is the initial premium paid.

FB, meanwhile, is up 1.3% at $94.40, on news the firm could soon be encroaching on the e-commerce scene by encouraging users to shop directly from its app. However, today's upside is being capped in the $94.50-to-$95 region -- an area that has contained FB's advances for most of the past few months.

Nevertheless, calls are outpacing puts by a more than 2-to-1 margin in today's trading, with buy-to-open activity detected at the stock's October 94 and 95 strikes. By initiating new positions here, speculators expect FB to continue moving higher through Friday's close. Unfortunately, the 95 strike is already home to a lofty accumulation of calls in the front-month series, and could contain the stock in the near term.

From a wider sentiment perspective, option traders have been accumulating long puts relative to calls at a faster-than-usual clip. The stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.59 ranks in the 92nd annual percentile. Echoing this is Facebook Inc's Schaeffer's put/call open interest ratio (SOIR) of 0.71, which sits higher than 67% of all similar readings taken in the past year. Simply stated, short-term traders are more put-heavy than usual toward FB.

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