Comcast Corporation (CMCSA) Upside Buzz Sparks Heavy Call Volume

Comcast Corporation (NASDAQ:CMCSA) call volume topped out at a 12-month high, as the stock hits record highs in the wake bullish analyst attention

Nov 29, 2016 at 3:23 PM
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Analysts have been waxing optimistic on Comcast Corporation (NASDAQ:CMCSA), sending the shares to a record high of $70.22 earlier. CNBC's Jim Cramer, for instance, said yesterday that CMCSA is "one of the better stocks since the Trump revolution" on deregulation expectations -- which could lead to a possible merger between Comcast and Verizon Communications Inc. (NYSE:VZ), per UBS -- and that it's "a stock that goes much higher because of its amazing cash flow." Wunderlich, meanwhile, boosted its price target on CMCSA to $85 from $78 this morning, saying the stock's a "safe haven," even if the broad-market Trump rally subsides. CMCSA stock was last seen trading up 2.5% at $69.99, and call volume was at a 52-week peak.

By the numbers, 79,765 CMCSA calls have changed hands -- 12 times what's typically seen at this point in the day, and easily surpassing the previous annual high of 77,704 calls traded on May 18. By contrast, around 6,800 puts have crossed the tape, in line with the average intraday pace. New positions are being initiated at the equity's June 77.50 and 80 calls, August 80 and 85 calls, and January 2018 85-strike calls, where a collective 65,802 contracts have traded. According to Trade-Alert, though, these are likely tied to stock.

More broadly speaking, today's call-skewed session just echoes the trend seen in CMCSA's options pits. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), speculative players have bought to open 5,298 calls over the past 20 sessions, compared to 4,562 puts. Plus, CMCSA's gamma-weighted Schaeffer's put/call open interest ratio (SOIR) of 0.35 indicates near-the-money calls nearly triple puts among options expiring in three months or less.

In the front-month series, peak call open interest is found at the December 72.50 strike, with 10,434 contracts outstanding. It looks like this action was largely due to one trader who possibly bought to open a block of 9,215 contracts on Nov. 18, when the stock was hovering around $68.25. If this is a result of a traditional "vanilla" option bull, the goal for the call buyer is for CMCSA to break out to a fresh record high north of $72.50 by the time the options expire at the close on Friday, Dec. 16.

Looking at the charts, this bullish bias among analysts and options traders isn't too surprising. In addition to boasting an impressive 24% year-to-date advance -- and topping out at an all-time peak today -- the shares of Comcast Corporation (NASDAQ:CMCSA) have outperformed the broader S&P 500 Index (SPX) by nearly 7 percentage points over the past month.

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