Calls Hot Before NVIDIA Earnings; Ford Traders See Big Bounce

Ford stock has been crushed in recent weeks

by Josh Selway

Published on Feb 5, 2018 at 1:41 PM

The 20 stocks listed in the table below have attracted the highest total options volume during the past 10 days. Stocks highlighted in yellow are new entries to the list, and data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White. Two names that stand out this time around are GPU giant NVIDIA Corporation (NASDAQ:NVDA) and automaker Ford Motor Company (NYSE:F). We'll break down some of the recent options activity on NVDA and Ford below.

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Options Sentiment Stays Bullish Leading Up to NVIDIA Earnings

NVIDIA will report earnings after the close this Thursday, Feb. 8, and call buying has been unusually popular ahead of the event. The security has a 10-day call/put volume ratio of 2.00 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), ranking in the 98th annual percentile. In the front-month February series, in particular, the 240 call saw notable buying during this time.

Shares of NVDA traded at a record high of $249.27 back on Jan. 31, but have since fallen to $224.42, down 3.9% today alone. This has the stock on pace for its first close below its 20-day moving average since mid-December, despite news the company is teaming up with Continental to build self-driving cars. Bullish or bearish, it's important to remember NVIDIA has been one of the best stocks for straddle buyers in recent years.

Traders Buy OOTM Ford Calls

Ford stock has also been pulling back. Since peaking at a 12-month high of $13.33 on Jan. 16, the shares have shed over one-fifth of their value to trade at $10.53, suffering three straight weekly declines in the process. But with the security approaching its August lows, options traders have been betting on a bounce.

First of all, the 10-day call/put volume ratio at the ISE, CBOE, and PHLX stands at an elevated 4.72 -- meaning almost five long calls have been initiated for every put. Moreover, this reading is just 2 percentage points from an annual high. A lot of this buying occurred at the out-of-the-money (OOTM) February 11.50 and March 12 calls, so many are speculating on a big Ford comeback in the weeks ahead.

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