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
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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.

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