Most Active Options: Dick's Sporting Goods, Inc. and Dunkin Brands Group Inc

Put players have been pounding retail stock Dick's Sporting Goods, Inc. (NYSE:DKS) and doughnut dealer Dunkin Brands Group Inc (NASDAQ:DNKN)

by Josh Selway

Published on May 12, 2016 at 11:22 AM

The 20 stocks listed in the table below have attracted the highest total options volume among mid-cap names during the past 10 trading days. Names 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 stocks of notable interest are retail stock Dick's Sporting Goods, Inc. (NYSE:DKS) and doughnut dealer Dunkin Brands Group Inc (NASDAQ:DNKN).

 

Midcap Options Trading May 12

Abercrombie & Fitch Co. (NYSE:ANF), GameStop Corp. (NYSE:GME), and DKS are all set to report earnings this month, with the latter scheduled to release its results a week from today. Ahead of the event -- and after watching its retail sector peers sell off on Wednesday -- skepticism has been picking up in DKS' options pits. 

At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, the stock's 10-day put/call volume ratio stands at an annual high of 18.74. This means options traders have been buying to open puts over calls at the fastest rate in the past 12 months. 

Digging deeper, puts have accounted for the six most popular DKS options during the past two weeks, judging by open interest added. The May 44 and 47 puts led the way, followed by the June 45 and 44 puts. Data from the ISE confirms noteworthy buy-to-open activity at all of these strikes, meaning traders are expecting DKS to extend its recent retreat over the next several weeks. 

Near-term traders are paying a pretty penny to play DKS' short-term options, too. The stock's Schaeffer's Volatility Index (SVI) of 63% is higher than 91% of all other readings from the past year, suggesting historically inflated volatility expectations ahead of earnings.

Until recently, Dick's Sporting Goods, Inc. (NYSE:DKS) had been performing well in 2016, rising from $35.21 to start the year to a seven-month high of $48.56 on May 2. Since then, though, DKS has dropped 13.7% to trade at $41.89 -- giving up support atop its 200-day moving average -- as the retail stock underperforms in May yet again

Put buyers also continue to blast DNKN. The stock's 10-day put/call volume ratio across the ISE, CBOE, and PHLX of 21.57 is just 1 percentage point from a 12-month high. Furthermore, DNKN's Schaeffer's put/call open interest ratio (SOIR) of 1.52 ranks in the 87th annual percentile, revealing an unusual put-skew among the stock's short-term speculators. 

The most popular DNKN option over the past two weeks has been the September 40 put, nearly doubling the open interest added of the next closest option. However, ISE data shows a preponderance of sell-to-open activity here, meaning options traders expect the $40 level to hold as support over the next few months. 

Still, short sellers love DNKN. In fact, it'd take DNKN shorts almost eight sessions to cover their positions, at the stock's average daily trading pace.

On the charts, Dunkin Brands Group Inc (NASDAQ:DNKN) is testing a foothold in the $45 area, and was last seen 0.9% lower at $45.13. This region has contained pullbacks since mid-February, and is home to both DNKN's 80- and 200-day moving averages. 

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