Options News
Tuesday, May 18, 2010



Occidental Petroleum (OXY)

Options trading was brisk on Occidental Petroleum Corp. (OXY) on Monday, as more than 99,700 contracts changed hands. This surge in volume was more than six times the stock's average daily trading volume of 16,531 contracts, according to data from WhatsTrading.com. Furthermore, traders were optimistic toward the shares, as nearly 82% of the volume crossed the tape on the call side.

Prior to yesterday's jump in call trading, options players had shown a preference for puts on the International Securities Exchange (ISE). During the past 10 trading sessions, 1.15 puts have been purchased to open for every one call purchased to open. This ratio of puts to calls is higher than 73% of all those taken during the past 12 months, pointing to a rising pessimism.

Analysts are very happy with OXY with majority on "buy" ratings or "holds." and Any downgrades from the "buy" group, or a continued shift among the options players toward the bears' side, could increase the selling pressure on this underpeforming stock.

From a technical perspective, the shares of OXY have struggled this year, as the equity has shed roughly 1% since the start of 2010. The equity has dropped below the support of its 10-week and 20-week moving averages.

OXY may 18, 2010



Bank of America Corporation New (BAC)

BofA (BAC) May 17 call is today’s second most actively traded options contract so far (recently surpassed by Citi Sep 4 calls). More than 50K traded. Some of the activity is likely closing. Open interest is 164K and, with shares up 10 cents to $16.45, the contract is 55 cents (3.3 percent) out-of-the-money, with less than four trading days of life remaining.

The top two trades — blocks of 2696 and 2567 contracts at the 10 cents — appear to be buyers. In fact, about half of today’s volume has been at 10 cents per contract. However, shares have now come off session highs of $16.75 and more recent trades have been at 7 and 8 cents. Implied volatility is up about 1 percent to 38.

BAC may 18, 2010



Royal Caribbean Cruises (RCL)

Options players innundated Royal Caribbean Cruises Ltd. (RCL) yesterday, as more than 48,900 contracts crossed the tape. This jump in volume was more than three times the equity's average single-session trading volume of 15,240 contracts, according to data from WhatsTrading.com. In addition, traders were feeling skeptical of the security, as 85% of the volume changed hands on the put side.

Ahead of Monday's action, traders showed a growing preference for calls on the stock. The ISE reports 1.6 calls purchased to open for every one put during the past two weeks. This ratio of calls to puts is higher than 94% of all those taken during the past year, indicating that calls have rarely been bought at a faster clip than puts.

Short sellers are starting to unwind their bearish bets. During the past month, the number of RCL shares sold short decreased by 23% to 18.4 million. However, more than 14% of the company's total floats remains sold short. Should the bears continue to buy back their pessimistic positions, it could pressure the security higher during the near term.

Technically speaking, the shares of RCL are up an impressive 23% since the beginning of the year. While the equity has fallen below the support of its rising 10-week moving average, the stock has found support at both the 30 level and its 20-week trend line. The security has been guided higher by these two intermediate-term trend lines since late March 2009

RCL may 18, 2010



Williams Companies (WMB)

Williams Companies Inc. (WMB) was the focus of some heavy options trading yesterday, as more than 125,200 contracts crossed the table. This increase in trading volume was more than 34 times the equity's average daily trading volume of 3,690 contracts, according to data from WhatsTrading.com. Furthermore, 95% of the volume changed hands on the call side.

Traders have shown a preference for calls on the ISE. During the past two trading weeks, 5.3 calls have been purchased to open for every one call purchased to open. This ratio of calls to puts is higher than 65% of all those taken during the past year. Furthermore, the SOIR for WMB stands at 0.28, as calls outnumber puts by more than three to one. This ratio of calls to puts is lower than 79% of all those taken during the past year. In other words, short-term options players have been more optimistically aligned toward the shares only 21% of the time during the past 52 weeks.

Meanwhile, Wall Street is betting on a rebound in the shares of WMB. Most analysts are rating the company a "buy" or better. Any downgrades from this group of optimists could send the security lower during the near term.

From a technical perspective, the shares of WMB are flat on the year. The stock has dropped below key support at its 10-week and 20-week moving averages, which guided the security higher since early April 2009. The equity is now testing support in the round-number 20 region.

WMB may 18, 2010



Corinthian Colleges, Inc. (COCO)

Corinthian Colleges, Inc. (COCO) has had a surge of option activity today, with roughly 13,000 contracts changing hands -- eight times the education issue's usual volume of just 1,600 contracts. Puts have comprised the bulk of this volume, with 9,468 of these bearish bets traded -- 15 times COCO's usual put volume of just 628.

The August series has caught option players' attention, with 5,165 contracts traded at the August 15 put -- 79% at the ask price, suggesting they were bought. With just 2,410 contracts currently open at this strike, it seems that at least a portion of these puts were newly added.

Conversely, the August 17.50 call has also been popular today, with 2,867 contracts changing hands on open interest of 6,338, making it difficult to determine if these calls are fresh positions. COCO has been all over the charts lately. The stock began 2010 around $13, peaked above $19 in April, and is now perched at $15.04.

Given COCO's technical performance, it's no surprise that option players are mixed toward the stock. COCO's Schaeffer's put/call open interest ratio (SOIR) stands at 0.95, indicating that calls nearly equal puts among options slated to expire in the next three months. This ratio ranks in the middling 55th percentile of its annual range, revealing that near-term traders are relatively complacent toward COCO.




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