Your intraday options trading update.
Volume in Weekly options has become anything but weak. The Weekly options that have a brief seven trading days of life are beginning to catch on with retail options trading investors who seem to be drawn to their short and intense life span.
Volume in the Weeklys on the Chicago Board Options Exchange (NASDAQ: CBOE) has grown from an average of about 170,000 contracts a day last August to about 400,000 in March. The jump has occurred as the CBOE and other options exchanges have introduced Weekly options on exchange-traded funds and high-volume equities that are in the news.
Some of the popular products with Weeklys that began trading today include iShares Silver Trust (NYSE: SLV), the iShares Russell 2000 Index (NYSE: IWM), Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Ford (NYSE: F), Las Vegas Sands (NYSE: LVS), Priceline.com (NASDAQ: PCLN), Exxon (NYSE: XOM), and Yahoo (NASDAQ: YHOO).
Investors use the Weeklys for several reasons, said Marty Kearney, director of educational programs at the CBOE’s Options Institute. Keep in mind many traders have preferred expiration week trading for the 38 years of listed options because the volume is usually higher, he said.
“Some investors like to play expiration week. Typically the option premium is cheaper because they are short term,” said Kearney.
But traders also use the Weeklys to offset risk on another option they hold with a longer life span, Kearney said. Or they may write a covered call with the Weekly, where they own a stock and sell a call option against it to earn the premium income, he said.
The CBOE posts its list of available Weeklys on the Wednesday afternoon before the Thursday when they begin trading. The Weeklys then trade into the next week and expire that Friday. Weeklys are not listed during the traditional expiration week, typically the third week of the month.
Weekly options usually have the same contract specifications as other listed options, except for their short life span. The CBOE and the other options exchanges are trading these Weeklys this week.
High Options Volume by Strike
The iShares Silver Trust (NYSE: SLV) is back on top with its SLV Jul 25 Put trading more than 102,000 options contracts. It was up .03 to .13. The SLV was down 1.3% to 36.43.
Emerging markets grabbing interest with the iShares MSCI Emerging Markets Index ETF (NYSE: EEM) rising .40 to $47.05. Several EEM strikes each trade around 50,000 contracts, led by the EEM Sep 46 Put, down .19 to 2.19, and the EEM Sep 41 Put down .09 to .82.
The SPDR S&P 500 ETF (NYSE: SPY) Weekly is busy. The SPY MayWeek4 133 Call trades 47,000 options, trading up .09 to .32.
Find more option analysis and trading ideas at Options Trading Strategies.
Stocks/Underlying – Big Daily Change in Option Volume
Orient Express Hotels (NYSE: OEH) trades 10,000 options, a massive rise from a typical day. No obvious news.
Tekelec (NASDAQ: TKLC) trades 11,535 options, 17 times a typical day. Stock is up .44 to 8.87. OptionMONSTER reports 1,750 Nov 8 Puts were sold at 0.80 and same number of Nov 7 Puts bought for 0.40.
Tiffany and Co. (NYSE: TIF) trades 27,450 options with the stock jumping 5.73 to 75.77. TIF first quarter numbers handily beat estimates, with income up 26%.
Stocks/Underlying – High Option Volume
Top equity is Microsoft (NASDAQ: MSFT) as stock rises .63 to 24.82. Options volume is 93,408.
The SPDR S&P 500 (NYSE: SPY) has option volume of about 871,000 contracts as it trades up to 132.86. The Standard & Poor’s Index Options (CBOE: SPX) is up 4.34 to 1324.81 on more than 318,000 option contracts.
The iShares Silver Trust (NYSE: SLV) trades more than 318,000 options as it falls after rising for several days.
The CBOE Volatility Index (CBOE: VIX) is down 1.08 to 15.99 with 130,000 options traded against the index.
The iShares MSCI Emerging Markets Index ETF (NYSE: EEM) trades nearly 300,000 options.
Burney Simpson is the managing editor of InvestorPlace options pages.