Most Active Weekly Options: Tesla Motors Inc and Valeant Pharmaceuticals Intl Inc

While option traders remain skeptical of Tesla Motors Inc (TSLA), they're bullish on Valeant Pharmaceuticals Intl Inc (VRX)

Feb 25, 2016 at 10:54 AM
facebook X logo linkedin


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 Model S manufacturer Tesla Motors Inc (NASDAQ:TSLA) and drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX).

160225mawo

TSLA is up 0.1% at $179.09 after stumbling out of the gate. While the shares have been rebounding since reaching a two-year low of $141.05 earlier this month, they've run into resistance at their 30-day moving average.

However, option traders aren't buying the bounce. In fact, during the past two weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have initiated 1.24 long puts for each call -- a ratio that ranks in the bearish 99th annual percentile.

As mentioned above, weekly options have been extremely popular on Tesla Motors Inc recently. Among the most active over the last five sessions are the weekly 2/26 170- and 175-strike puts, which have seen buy-to-open action, according to data from the ISE, CBOE, and PHLX. In other words, these traders believe TSLA will close this week below the respective strikes. Today, in fact, it looks like more speculators are purchasing new positions at these strikes.

Meanwhile, VRX's weekly 2/26 85-strike call has been very popular in the past week, with open interest adding over 4,900 contracts. According to the ISE, CBOE, and PHLX, a large number of these options were bought to open as traders roll the dice on gains by week's end, when the series expires -- prior to Monday morning's earnings call.

Taking a step back, VRX call buyers have been busy over the last 10 weeks. The stock's 50-day ISE/CBOE/PHLX call/put volume ratio ranks in the high 84th percentile of its annual range, indicating traders have bought to open calls over puts at an accelerated clip in recent months -- despite a number of red flags, including congressional scrutiny.

Things aren't any better on the charts, either. Valeant Pharmaceuticals Intl Inc has lost over 68% since its all-time high of $263.81 in August, last seen 0.6% lower at $83.34. From a contrarian perspective, a capitulation among option bulls could lead to headwinds down the road.

Sign up now for Schaeffer's Market Recap to get all the day's big stock movers, must-know technical  levels, and top economic stories straight to your inbox.

 

Unlock Weekend Profits with Chris Prybal's Favorite Strategy Up +487.5% in 2024

With the markets going left, right, and sideways, you need to have a plan now more than ever. 

Expert Trader Chris Prybal is no stranger to volatility, and has mastered finding big stock rallies while other traders aren't looking over the weekend. Rallies that produced gains like +207% on RTX calls, +236% on MARA calls, and +238% on NET calls.

A few simple moves on Sunday at 7pm could be the “Secret Sauce” your portfolio needs to not just stay afloat, but make unprecedented gains in this turbulent market.


Don’t sit on the sidelines, beat the market with Chris Prybal's strategy. Join him now!