The major market indices finished slightly higher Tuesday, with the S&P 500 breaking all-time highs above 2,100. Call popularity fell off slightly in the options pits, with the CBOE put/call volume ratio rising to 0.58, the home of its 10-day moving average. Among the top 10 most active stocks in the options pits were Verizon Communications Inc. (NYSE:VZ), Transocean LTD (NYSE:RIG), and GoPro Inc (NASDAQ:GPRO).
Verizon Communications Inc. (VZ)
Puts were the investment vehicle of choice for Verizon traders on Tuesday. VZ stock saw some 229,000 option contracts change hands, with 72% of that volume falling on the put side. The soon-to-expire Feb $41 put appears to be the most popular among short-term traders, sporting open interest of more than 51,000 contracts. As of yesterday, this contract was more than eight points out of the money.
In the news yesterday, Verizon said it won $10.4 billion in wireless licenses from the U.S. government’s wireless spectrum auction this week. The company said it no longer needs such large acquisitions, and that it will focus on efficiency or leasing spectrum for the time being.
Transocean LTD (RIG)
Shares of offshore drilling specialist Transocean are being punished this week after the company announced it was slashing it dividends by 80% and that CEO Steven Newman has resigned. Unfortunately for Newman, he became CEO just before the 2010 Gulf of Mexico oil spill disaster. Ian Strachan is slated to replace Newman.
The news drew what appears to be optimism from within the options trading camp. Of the 151,509 contracts trading on RIG shares, 80% were call options. The growing attention to calls has been a grudgingly slow process for RIG options traders, with stock’s February/March put/call open interest ratio sliding lower since the start of February.
That said, the current ratio has a long way to fall before it could be considered neutral, arriving in the top 10% of all such readings taken in the past year at 2.83. In premarket trading, RIG stock is down more than 4% at $18.27.
GoPro Inc. (GPRO)
GoPro stock surged more than 12% on Tuesday, with shares claiming a foothold above former support/resistance at the 50 level. GRPO stock was driven higher by an upgrade to “outperform” at Northland Securities, as well as the expiration of the stock’s lockup period tied to its initial public offering.
In the options pits, activity was relatively bullish in nature, with 64% of the 123,726 option contracts trading on GRPO crossing on the call side. Out-of-the-money calls have been quite popular with GPRO during the past several weeks. In fact, the Feb $70 call is currently home to peak call open interest of 15,886 contracts on the CBOE. As you can see, this strike is nearly 20 points out of the money with February options set to expire at the end of the week.
As of this writing, Joseph Hargett did not hold a position in any of the aforementioned securities.
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