Options Volume Skyrockets as Atwood Oceanics, Inc. (ATW) Pops

A stellar earnings report has shares of Atwood Oceanics, Inc. (NYSE:ATW) soaring

May 6, 2016 at 3:04 PM
facebook twitter linkedin

Atwood Oceanics, Inc. (NYSE:ATW) is on track for its best day ever, after the oil rig operator turned in a first-quarter earnings beat -- a recent trend within the industry. What's more, the energy stock is one of the biggest percentage gainers on the New York Stock Exchange (NYSE), and is poised to topple a pesky overhead trendline for the first time in almost a year. At last check, ATW stock is up 32.9% at $11.48 -- and speculators are rushing to the stock's options pits at a rapid-fire rate.

By the numbers, 9,124 ATW options have changed hands so far. Not only is this an annual high, but it's also 15 times the typical number of options that have traded at this point in the day. Put traders have the upper hand, with put options outpacing call options by a roughly 2-to-1 margin.

Most active are ATW's May and September 10 puts, where nearly 4,700 contracts have collectively traded. It appears as if the majority of the action is of the buy-to-open kind, as bearish options traders bet on a retreat back to single digits by the close on the respective expiration dates of Friday, May 20, and Friday, Sept. 16.

Widening the sentiment scope shows call buyers have been more active in recent weeks. Amid relatively light absolute volume, ATW has racked up a 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 7.17 -- in the 85th annual percentile.

With 43% of Atwood Oceanics, Inc.'s (NYSE:ATW) float sold short, though, some of this recent call buying could be a result of shorts hedging against any upside risk. In fact, considering ATW boasts a short interest ratio of 5.9 -- meaning it would take nearly six days to cover these bearish bets, at the stock's average daily pace of trading -- some of today's rally could be a result of shorts covering.

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.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners