Most Active Options: United States Steel, JCPenney

Weekly options traders are setting their sights on United States Steel Corporation (X) and J C Penney Company Inc (JCP) today

Aug 9, 2016 at 2:59 PM
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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 steel producer United States Steel Corporation (NYSE:X) and retailer J C Penney Company Inc (NYSE:JCP).

most active options august 9

X stock is taking it on the chin today, slumping 5.8% to trade at $24.34, after the company announced late yesterday an offering of 17 million common shares. Apparently, the stock isn't getting a boost from Ontario Steel Investments' bid to buy U.S. Steel Canada.

X's put options have picked up amid these headlines, running at 1.2 times the usual intraday rate, and easily outstripping calls. The most active options are the weekly 8/12 23-, 24.50-, and 25-strike puts, where data hints at some buy-to-open activity. Assuming this is the case, these short-term traders foresee X stock continuing its descent through week's end, when the series expires.

This represents quite a change of pace for U.S. Steel's options traders. During the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculators have bought to open 1.17 calls for every put -- a ratio that sits just 4 percentage points from an annual high.

Technically speaking, this optimism among options players is warranted. On a year-to-date basis, United States Steel Corporation has tripled in value, and hit an annual high of $27.64 late last month on the back of upbeat earnings.

Turning our attention to JCP, the retail stock is one of several sector peers being dragged lower today on Coach Inc's (NYSE:COH) mixed earnings report. At last check, the shares were off 1.9% at $9.32, continuing their struggle in single-digit territory. Speaking of earnings, JCP will report ahead of the open this Friday.

With J C Penney's quarterly results just around the corner, traders are expressing an interest in the weekly 8/12 series of options. Specifically, it looks like bulls are buying to open the weekly 8/12 10-strike call -- hoping the shares can jump into double-digit territory -- while bears are purchasing fresh positions at the 9.50 put, counting on extended downside through week's end.

Historically speaking, option bears have held the advantage. At the ISE, CBOE, and PHLX, traders have bought to open 1.39 puts for every call on J C Penney Company Inc, looking back 10 days -- a ratio that ranks in the 84th annual percentile. Moreover, the stock's Schaeffer's put/call open interest ratio (SOIR) stands at a 12-month peak of 2.33, with puts more than doubling calls among options expiring in the next three months.

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