Most Active Options: Chesapeake & Freeport-McMoRan

Recently, options traders have preferred Chesapeake Energy Corporation (CHK) calls and Freeport-McMoRan Inc (FCX) puts

Jun 2, 2016 at 3:23 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 commodity stocks Chesapeake Energy Corporation (NYSE:CHK) and Freeport-McMoRan Inc (NYSE:FCX).

most active options june 2

Oil stocks started off on the wrong foot today, but have since reversed higher on a larger-than-forecast drop in weekly crude inventories. However, CHK has failed to benefit from this reversal, last seen down 2.5% at $4.26. And year-to-date, the energy stock has lost over 5%.

Earlier, however, one option bull rolled the dice on an end-of-week rebound. Specifically, the trader bought to open a block of 2,345 weekly 6/3 4-strike calls for $0.36 apiece, expecting the underlying to topple breakeven at $4.36 (strike plus premium paid) by tomorrow's close, when the series expires. If, however, CHK tumbles south of $4, the most the trader risks losing is the initial cash outlay -- about $84,000 (premium paid * number of contracts * 100 shares per contract).

Longer term, call buying has hit an annual extreme on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). Specifically, Chesapeake Energy Corporation's 10-day call/put volume ratio of 3.79 sits in the 100th percentile of its 52-week range.

Meanwhile, FCX's options pits have been brimming with negativity. The miner's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.98 ranks in the 88th percentile of its annual range. Likewise, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.62 rests a mere 7 percentage points from a 12-month peak.

The build-up in skepticism is confounding, considering FCX's strong technical performance. At $10.60, the shares have soared nearly 57% on a year-to-date basis. What's more, the stock is a hair above its 80-day moving average, which has proven a bullish omen over the past three years. Specifically, FCX has touched the trendline four times, and going out one week, has been higher on three of those occasions -- with an average gain of 1.7%.

This technical set-up bodes well for bulls. If Freeport-McMoRan Inc takes another bounce off of the aforementioned trendline, a capitulation among option bears could result in tailwinds. Alternatively, it's possible recent put buying has come at the hands of shareholders seeking downside protection.

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