Most Active Options: Citigroup Inc and JPMorgan Chase & Co.

Options traders have taken different approaches toward bank stocks Citigroup Inc (C) and JPMorgan Chase & Co. (JPM)

Jun 30, 2016 at 10:56 AM
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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 bank stocks Citigroup Inc (NYSE:C) and JPMorgan Chase & Co. (NYSE:JPM).

most active options june 30

For a second straight year, the Fed gave C a thumbs up on its stress test. This prompted the bank to more than triple its shareholder dividend, to 16 cents from 5 cents. Nevertheless, C is down 0.7% at $41.83, extending its year-to-date struggles. So far in 2016, the financial stock has lost roughly 19% of its value.

On the options front, traders have been buying to open calls over puts at an accelerated clip in recent months. Specifically, C's 50-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) call/put volume ratio of 1.97 ranks in the top quartile of its annual range -- with long calls nearly doubling puts. An unwinding of this optimism could result in headwinds for the shares.

It appears this may be starting to happen. C's most active call this morning is the out-of-the-money August 45 strike, where ISE data confirms a number of positions have been sold to close.

Analyst downgrades remain a distinct possibility, too. After all, Citigroup Inc has received 12 "buy" or better recommendations, compared to just four "holds" and not a single "sell."

Checking in on sector peer JPM, the bank stock has edged 0.1% higher at $61.26. Apparently, the shares are getting a modest boost from the financial firm's own successful stress test, which prompted the announcement of a $10.6 billion stock buyback program (subscription required). Longer term, though, JPM is still down 7% year-to-date.

Options traders have been banking on extended losses, too -- no pun intended. JPM's 50-day ISE/CBOE/PHLX put/call volume ratio of 0.99 ranks just 3 percentage points from a 52-week peak. In today's trading, the weekly 7/1 series is very popular, accounting for the top three strikes. It appears some speculators may be buying to open the weekly 7/1 60- and 61-strike puts, hoping for a reversal lower by tomorrow's close, when the series expires.

On the other hand, the brokerage crowd has maintained a glass-half-full approach. Fourteen of 19 analysts recommend buying JPMorgan Chase & Co. stock, and its average 12-month price target of $70.92 resides in record-high territory.

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