Most Active Weekly Options: Apple Inc. and Valeant Pharmaceuticals Intl Inc

Options buyers have been targeting Apple Inc. (AAPL) and Valeant Pharmaceuticals Intl Inc (VRX) calls, even though the stocks have fared poorly long term

Sep 1, 2016 at 11:30 AM
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The 20 stocks listed in the table below have attracted the highest weekly 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 Dow stock Apple Inc. (NASDAQ:AAPL) and drugmaker Valeant Pharmaceuticals Intl Inc (NYSE:VRX).

most active weekly options september 1

AAPL is in the headlines this morning after CEO Tim Cook responded to the European Union's (EU) recent tax ruling against the iPhone purveyor. Specifically, the executive described the decision as "total political crap," with no basis in law.

Meanwhile, AAPL options are changing hands at 1.4 times the expected intraday pace. In terms of weekly strikes, the 9/2 106 call and 105 put may be seeing some buy-to-open activity. In terms of their goals, the call buyers think the tech stock will topple $106 by tomorrow's close, when the series expires, while the put buyers anticipate the shares will breach $105.

In the last two weeks, it's the former group that's been in control of the options pits. Specifically, traders have bought to open 1.79 calls for every put at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) -- a ratio ranking in the 79th annual percentile. Plus, AAPL's Schaeffer's put/call open interest ratio (SOIR) rests at an annual low of 0.53, suggesting short-term open interest levels haven't been more call-skewed in the past 12 months.

The enthusiasm toward Apple Inc. is curious, as it's perched at $105.91 -- just a hair north of its year-to-date breakeven of $105.26. What's more, since its November peak, the stock has been charting a series of lower highs, and a recent run into the $110 range looks like it's been exhausted. If AAPL resumes its longer-term trend lower, a capitulation among option bulls could exacerbate losses.

Shifting our attention to VRX, the drugmaker's seeing a lot of activity at the weekly 9/2 series of options today -- accounting for seven of the 10 most active strikes. In terms of buy-to-open activity, some may be transpiring at the 30-strike call, as traders bank on the stock toppling the round-number level by tomorrow's closing bell.

Call buying is business as usual for VRX options traders. According to data at the ISE, CBOE, and PHLX, the stock has racked up a 50-day call/put volume ratio of 1.78, outstripping 70% of all readings taken in the past year. That said, a portion of these bets could be protective in nature, considering short interest spiked 11.5% during the last two reporting periods, and accounts for over one-tenth of VRX's total float.

On the charts, Valeant Pharmaceuticals Intl Inc has barely moved this afternoon, last seen 0.1% lower at $29. While the shares have been fighting back from their late-June record low, the fact remains they've had a woeful year, as the company's predatory pricing practices have come under increasing scrutiny -- not unlike this sector peer.

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