Most Active Options: Barrick Gold and Freeport-McMoRan

Barrick Gold Corporation (USA) (ABX) and Freeport-McMoRan Inc (FCX) have seen unusually heavy options action in recent weeks

Jan 3, 2017 at 12:06 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 gold interest Barrick Gold Corporation (USA) (NYSE:ABX) and mining concern Freeport-McMoRan Inc (NYSE:FCX). Here's a quick look at how options traders are lining up on ABX and FCX. 

Most Active Options Jan 3

New to the list this week, ABX has seen a strong preference for call options in recent weeks. In fact, the stock has seen more than five calls purchased for every put over the past 10 trading days at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The resulting call/put volume ratio of 5.03 ranks just 4 percentage points from an annual bullish high. Near-term speculators have also been call-skewed, per ABX's Schaeffer's put/call open interest ratio (SOIR) of 0.59 -- in the low 16th percentile of its annual range.

Not including options that have since expired, the January 16 call saw the largest increase in open interest over the past 10 sessions, with the weekly 1/6 15.50-strike call close behind. Buyers of these calls are betting ABX will rally even higher through the options respective expiration dates, on Friday, Jan. 20, and at this Friday's close.

On both the put and call side, short-term options buyers could be getting a solid deal at the moment. With a Schaeffer's Volatility Index (SVI) of 48% -- in the 20th annual percentile -- the equity's near-term options are pricing in unusually low volatility expectations. Plus, the stock boasts a Schaeffer's Volatility Scorecard (SVS) of 90, suggesting the options market has notably underpriced ABX's ability to make big moves on the charts during the past 12 months.

Speaking of which, the gold stock finished 2016 with an impressive gain of nearly 117%, and is up another 1.6% today at $16.24. Since pulling back from a multi-year high in July, however, ABX has been tapping lower highs and lows, bumping up against resistance at the 20-week moving average. Still, a breakout of this channel could lead to some upbeat analyst attention, which would likely be a boon for the shares. At present, 10 out of 14 brokerage firms rate Barrick Gold Corporation (USA) a "hold" or "strong sell."

Switching gears to FCX, the miner also ranked among last year's top performers, tacking on 95% for 2016. The shares are up another 2.4% at $13.50 today following a bounce off the $13 level, which gave the stock some trouble back in July and August.

Like ABX, FCX could stand to benefit from a round of bullish brokerage notes, as three-quarters of the analysts tracking the stock rate it a "hold" or worse. Moreover, the average 12-month price target of $13.14 sits at a discount to FCX's current levels. Elsewhere, the stock may be seeing an influx of optimism. Short interest on the equity has been falling sharply during recent reporting periods, though these bearish bets still represent about 6% of FCX's total float.

Looking to the options pits, FCX has also seen a preference for bullish bets of late. At the ISE, CBOE, and PHLX, the stock's 10-day call/put volume ratio of 2.27 outranks 83% of all comparable readings from the past year. Calls are hot again today, too, changing hands at twice the expected intraday rate. Plus, it seems to be a prime time to pick up short-term premium on FCX. The security's SVI of 49% sits just 7 percentage points from an annual low, while its SVS is docked at 93.

Interestingly, options traders have been favoring longer-term bets over the past two weeks. In fact, the May series accounts for five of the top 10 options, in terms of most positions added over the period. Leading the pack were the May 12 and 13 puts, where it looks like some bearish speculators have purchased new positions, looking for Freeport-McMoRan Inc to move lower in the coming months.

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