Most Active Options: Nike Inc and NVIDIA Corporation

Athletic apparel giant Nike Inc (NYSE:NKE) and semiconductor stock NVIDIA Corporation (NASDAQ:NVDA) have gone in markedly different directions in 2016

Dec 27, 2016 at 1:43 PM
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The 20 stocks listed in the table below have attracted the highest options volume during the past 10 trading days. Stocks 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. Among the stocks attracting notable attention are athletic apparel giant Nike Inc (NYSE:NKE) and semiconductor stock NVIDIA Corporation (NASDAQ:NVDA). Here's a quick look at how options traders are lining up on NKE and NVDA. 

MAO Dec 27

NKE is heading into the new year with hopes of a turnaround. At $51.43, the shares have lost nearly 18% in 2016, making Nike the biggest Dow laggard for the year by far. While the stock has bounced back some after breaching the $50 level in early November, the declining 80-day moving average is now applying overhead pressure. 

In the meantime, NKE options data reveals a rather mixed picture. On the one hand, call buying continues to be more popular than put buying across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), according to the stock's 10-day call/put volume ratio of 1.25. Moreover, the February 52.50 call saw the second largest increase in open interest during the past 10 days, with data from the major exchanges showing notable buy-to-open activity. At the same time, traders targeting options expiring within the next three months are unusually put-skewed at the moment. This is based on NKE's Schaeffer's put/call open interest ratio (SOIR) of 1.15, which tops 86% of the past year's readings.

Regardless of how one's betting, it would seem to be a good time to buy near-term Nike Inc (NYSE:NKE) options. Specifically, NKE's Schaeffer's Volatility Index (SVI) of 19% ranks just 12 percentage points from a 12-month low, meaning volatility expectations are rather muted at the moment for short-term contracts. 

Unlike NKE, NVDA has enjoyed an unbelievable year, coming in as the top S&P 500 Index (SPX) stock of 2016. The shares have rallied a whopping 250% year-to-date, including another 5.1% pop today to trade at $115.38, earlier touching a record peak of $116.65. Not surprisingly, NVDA's 14-day Relative Strength Index (RSI) registers well above the overbought threshold of 70, last seen at 82.5. 

The stock's extended rally hasn't caught options traders off guard, either. Call buying outpaced put buying during the past two weeks at the ISE, CBOE, and PHLX, with the March 105 and 110 calls seeing the largest increases in open interest during that time. Other traders may be eyeing even higher highs for the stock, as more than 3,000 contracts were added during the past 10 days at the March 130 call -- topping one bullish analyst's bold prediction

It's the same setup in today's option action, too. Call volume is so far outpacing put volume, and running at two times the expected intraday pace. The most popular option is the weekly 12/30 115-strike call, and all signs point to buy-to-open activity. Since these options expire at the end of the week, traders are betting on NVDA ending the year on a strong note. 

But while the stock continues to soar and calls remain popular, short sellers show no sign of shying away. In fact, short interest edged higher during the past two reporting periods, and now almost 14% of the stock's float is sold short. At NVDA's average daily trading volume, it would take these bears almost six sessions to cover their positions. 

Regardless, premium is also muted on the stock's near-term options, with NVDA sporting an SVI of 37% -- in the low 16th annual percentile. Not to mention, NVIDIA Corporation (NASDAQ:NVDA) has a Schaeffer's Volatility Scorecard of 94, which tells us the stock has tended to make bigger-than-expected moves over the past year, compared to what the options market has priced in. 

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