Most Active Options: Lockheed Martin Corporation and United States Steel Corporation

Put buyers have been pounding Lockheed Martin Corporation (LMT), while United States Steel Corporation (X) has earned attention from call buyers

by Alex Eppstein

Published on Aug 22, 2016 at 2:20 PM
Updated on Aug 22, 2016 at 2:20 PM

The 20 stocks listed in the table below have attracted the highest total options volume 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 aerospace firm Lockheed Martin Corporation (NYSE:LMT) and steel stock United States Steel Corporation (NYSE:X).

most active options august 22

LMT is 0.5% higher at $255.32, on the heels of positive analyst attention. Specifically, Bernstein raised its price target on the stock to $259 from $245. This represents a rare dose of optimism for the shares, despite their 17.5% year-to-date advance -- and last week's record high of $266.93.

For instance, two-thirds of analysts rate LMT a "hold" or worse. Not to mention, the stock's consensus 12-month price target of $260.42 is just a stone's throw away from present levels. Elsewhere, short interest absolutely erupted during the past two reporting periods, nearly quintupling to 13.6 million shares.

On top of that, at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), traders have bought to open 2.19 puts for every call during the past two weeks -- 3 percentage points from an annual high. Plus, Lockheed Martin Corporation's Schaeffer's put/call open interest ratio (SOIR) of 2.46 outstrips all other readings from the past year. To be sure, some of these puts may have come at the hands of shareholders hedging, but an unwinding of "vanilla" bears could contribute to tailwinds for the long-term outperformer.

X stock is benefiting from upbeat brokerage attention, too. Specifically, the shares have gained 2.9% at $20.98, after Citigroup initiated coverage with a "buy" endorsement and a $27 price target. This is fairly unusual, as 11 of 12 analysts rate U.S. Steel a "hold" or worse.

While the brokerage crowd is generally bearish toward the stock, options traders are anything but. During the past two weeks at the ISE, CBOE, and PHLX, speculators have bought to open 1.60 X calls for every put -- a ratio that stands just 10 percentage points from an annual peak. Echoing this call-focus, the shares sport an SOIR of 1.56, which rests below 85% of comparable readings recorded in the prior 12 months.

Speaking of which, call options are hot among X traders this afternoon. Intraday volume is at 1.6 times the norm, and buy-to-open activity is detected at the weekly 8/26 20-strike call -- suggesting speculators foresee additional upside for U.S. Steel through week's end, when the series expires.

The bullish bets make sense in light of United States Steel Corporation's technical trajectory. Despite pulling back from a late-July annual high of $27.64, the stock has advanced a mind-bending 163% year-to-date, and may be finding a foothold at its 50-day moving average.

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