Goodyear Tire & Rubber Co (GT) Call Options Fly on Growth Plan, Dividend Boost

Goodyear Tire & Rubber Co (GT) is sizzling on the heels of an updated growth plan and increased dividend

Sep 15, 2016 at 10:47 AM
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Goodyear Tire & Rubber Co (NASDAQ:GT) has jumped 4.8% to trade at $32.28, putting the red-hot stock in territory not explored since late April. The shares have received a boost after the company updated its growth plan and unveiled a 43% dividend increase ahead of its annual investor day, which is currently underway. Meanwhile, GT's intraday stock and options volume are running near the top of their respective annual ranges.

The stock's call options, in particular, are hot. With roughly 7,000 contracts on the tape, calls are being exchanged at more than triple the usual intraday rate. Most active has been the September 32 strike. From the looks of it, traders may be buying and selling to close the in-the-money positions, at least according to data from the International Securities Exchange (ISE).

The September 32 call has been very popular over the last two weeks, as well. The strike has seen the second-largest increase in open interest, adding roughly 14,000 contracts. Plus, per data from across the major exchanges, considerable buy-to-open activity has been detected -- suggesting plenty of GT options traders should be cheering the stock's upward gap this morning.

Speaking even more generally, bulls have dominated Goodyear's options pits. According to the ISE, Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), 2.36 calls have been bought to open for every put in the past two weeks. The corresponding call/put volume ratio ranks in the top quartile of its annual range.

Now looks like a good time to buy short-term options on Goodyear Tire & Rubber Co (NASDAQ:GT), too. The stock's Schaeffer's Volatility Index (SVI) checks in at 35%, in the bottom one-third of all readings from the last 12 months. In other words, the options market is pricing in relatively low near-term volatility expectations at the moment.

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