Most Active Weekly Options: Facebook Inc and Valeant Pharmaceuticals Intl Inc

Facebook Inc (FB) and Valeant Pharmaceuticals Intl Inc (VRX) have been targeted by weekly options traders in recent weeks

by Kirra Fedyszyn

Published on Feb 1, 2016 at 2:42 PM
Updated on Feb 1, 2016 at 2:46 PM

The 20 stocks listed in the table below have attracted the highest total weekly options volume during the past 10 trading days. Stocks 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 notable names are social media titan Facebook Inc (NASDAQ:FB) and drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX).

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FB is trading 2.7% higher at $115.21 -- and fresh off a new all-time high of $115.61. The stock is already up more than 10% in 2016, boosted in part by last week's strong fourth-quarter earnings. Analysts are expecting more gains -- of 29 brokerages providing coverage on FB, only one rates it a "hold," without a "sell" to be found.

But while the security has outperformed the S&P 500 Index (SPX) by about 19 percentage points over the last three months, option traders have been more pessimistic than usual. Specifically, on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Facebook Inc's 10-day put/call volume ratio of 0.62 is in the 98th percentile of its annual range.

Today, FB options are trading at about 1.3 times their average intraday pace. The most active strike is the weekly 2/5 115-strike call, where nearly 15,000 contracts have changed hands. With only 3,877 contracts in open interest at this strike, it looks like traders are continuing to load up on FB's weekly options in today's trading.

VRX today is trading up 2.8% at $92.77. But year-to-date, the shares are still down 8.7%, as activist investor Bill Ackman recently reduced his stake in the company, and Valeant CEO Michael Pearson's health issues have kept him hospitalized for longer than expected.

In the wake of a precipitous fall for VRX during the second half of 2015 that resulted in a peak-to-trough haircut of nearly 74% for the stock, option traders have been busy betting on a rebound. At the ISE, CBOE, and PHLX, the equity's 50-day call/put volume ratio of 1.89 is higher than 99% of all comparable readings from the past year.

Plus, Valeant Pharmaceuticals Intl Inc also has a Schaeffer's put/call open interest ratio (SOIR) of 0.99 -- which ranks higher than only 8% of the past year's readings. That means, among options expiring in the next three months, traders are holding significantly more VRX calls than puts relative to usual open interest levels.

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