Most Active Options: Valeant Pharmaceuticals Intl Inc and Energy Transfer Equity LP

Valeant Pharmaceuticals Intl Inc (NYSE:VRX) has been the target of put buyers in recent weeks, while call buyers have taken aim at Energy Transfer Equity LP (NYSE:ETE)

Apr 25, 2016 at 2:38 PM
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The 20 stocks listed in the table below have attracted the highest 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 biotech Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and energy stock Energy Transfer Equity LP (NYSE:ETE).

Most Active Option Volume April 25

It's been a wild ride for VRX stock, as the firm tackles a number of fundamental blunders. Today, the stock was most recently seen down 1.6% at $35.42, after Valeant confirmed its replacement for exiting CEO Michael Pearson and said it has received more default notices following the delay of its annual reports. Longer term, VRX has shed almost 87% since topping out at an Aug. 6 record peak of $263.81.

In the options pits, traders have been growing increasingly skeptical of VRX. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for instance, the stock's 10-day put/call volume ratio has more than doubled to 0.94 in the past two weeks, and now ranks in the bearishly skewed 68th annual percentile.

Drilling down, VRX's weekly 5/6 30.50-strike and May 30 puts have seen the biggest rise in open interest over this time frame, with 58,532 contracts added. Those buying to open the puts expect Valeant Pharmaceuticals Intl Inc to sink below the strike prices by the close at the respective expiration dates of Friday, May 6, and Friday, May 20.

ETE is off 4.6% today at $11.12, sinking in step with crude oil futures. This runs counter to the stock's longer-term trajectory -- even as skepticism builds over its proposed merger with Williams Companies Inc (NYSE:WMB) -- with shares of ETE up 178% from their Feb. 8 seven-year low of $4.00.

At the ISE, CBOE, and PHLX, meanwhile, 7.88 call options have been bought to open for every put option over the past 10 sessions -- a ratio that arrives in the 76th annual percentile. Plus, ETE's Schaeffer's put/call open interest ratio (SOIR) of 0.26 sits lower than 98% of all comparable readings over the past year, meaning short-term options traders have rarely been as call-heavy as they are now.

The stock's July 12.50 call has easily seen the most contracts added over this time frame -- 57,638 to be exact. According to the major options exchanges, a large portion of this activity is of the buy-to-open kind, suggesting options traders are eyeing a move above $12.50 for Energy Transfer Equity LP by front-month options expiration.

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