Most Active Options: United States Steel and Joy Global

Options have been traded at unusual levels on underperformers United States Steel Corporation (X) and Joy Global Inc. (JOY)

Dec 14, 2015 at 1:43 PM
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The 20 stocks listed in the table below have attracted the highest total options volume among mid-cap names 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 steel producer United States Steel Corporation (NYSE:X) and mining interest Joy Global Inc. (NYSE:JOY).

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X is trading 4.4% lower today, last seen at $7.88, due to a fresh price-target cut to $9 from $12 at Nomura. Negative notes are nothing new for the stock -- its price target was cut to $4 from $10 at Citigroup on Friday -- which has tumbled 70% on the charts in 2015, hitting a new all-time low last week at $6.80.

Unsurprisingly, traders have been placing bearish bets on United States Steel Corporation (NYSE: X) at a faster-than-usual clip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), X has a 50-day put/call volume ratio of 1.49 -- just 2 percentage points from an annual high.

Today, however, calls are being traded at a quicker-than-usual clip, crossing the tape at 1.2 times their usual intraday pace, according to Trade-Alert data. The most active option is the December 8.50 call, but it looks like the action may be of the sell-to-open variety. There is also a good deal of movement on the April 10- and 12-strike calls, with what could be a bear call spread initiated.

X's 30-day at-the money (ATM) implied volatility (IV) is 1 percentage point shy of an annual high, at 104%, indicating that traders are expecting the underlying security to make some big moves in the near future. Echoing this, the stock's Schaeffer's Volatility Index (SVI) of 96% stands higher than 77% of all other readings from the past year, pointing to historically inflated short-term volatility expectations.

Outside of the options pits, sentiment is also bearish. More than 37% of the stock's available float is currently sold short, accounting for nearly a week of trading, at X's typical volumes. 

JOY is another stock that has floundered in 2015, shedding 75.7% so far this year. Today the stock is down 4.9%, last seen trading at $11.23, and just off a new 11-year low of $11.12. Of the 17 analysts following JOY, 13 maintain "hold" or "sell" ratings, and more than one-fifth of the stock's total float is sold short -- which would take almost seven days to buy back, at JOY's average trading pace.

After a recent preference for puts, options traders have begun picking up long calls on the security. On the ISE, CBOE, and PHLX, Joy Global has a 50-day call/put volume ratio of 1.81 -- higher than 82% of readings from the past 12 months. Of course, some of the action at out-of-the-money strikes could be attributable to hedging activity among the shorts.

Today, calls are being traded at nearly twice their usual volume, while puts are trading at just half their normal pace. The weekly 12/31 12-strike call is the most active option today, with 1,220 contracts traded so far. It looks like speculators are buying the calls at a volume-weighted average price (VWAP) $0.55. As such, the buyers will begin to profit if JOY muscles back atop $12.55 (strike plus VWAP) by the end of the year, which encompasses the company's earnings release before the bell on Wednesday.

Joy Global Inc.'s (NYSE:JOY) 30-day ATM IV of 78.2% marks an annual high. The equity's near-term ATM straddle suggests traders are pricing in a move of 12.4% for JOY -- much greater than average. Following its last eight turns in the earnings confessional, the stock has averaged a one-day move of 4.8%.

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