American International Group Inc.
(NYSE:AIG) is trading roughly 0.9% higher today, extending its lead north of the $44 mark. This underfoot layer emerged as support since early May, and one group of speculators is betting on the level to continue to serve as a foothold through week's end.
Jumping right in... Roughly 2,100 contracts have traded at the weekly 5/24 44-strike put for a volume-weighted average price (VWAP) of $0.15. Almost all of these out-of-the-money puts have gone off at the bid price, and volume is outstripping open interest -- pointing to sell-to-open activity
. Ideally, AIG will remain north of $44 by the close on Friday -- the stock is currently trading at $44.30 --allowing the options to expire worthless, and the speculators to keep the initial net credit, which is also the maximum reward on the play.
This tendency to bet neutral-to-bullishly
on AIG isn't a new concept, per data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). During the past 10 sessions, traders on these exchanges have sold to open 32,685 puts. By comparison, 21,822 puts have been bought to open.
Option traders have been increasing their bullish presence toward American International Group in the traditional sense, as well. Specifically, the stock's 50-day call/put volume ratio at the ISE, CBOE, and PHLX sits at 2.86, versus its month-ago reading of 2.17. What's more, the current ratio ranks in the 74th percentile of its annual range, indicating calls have been bought to open over puts at an accelerated clip in recent months.
This bullishly skewed bias is understandable when looking at AIG's technical backdrop. For starters, the stock has outperformed the broader S&P 500 Index
(INDEXSP:.INX) by nearly 10 percentage points throughout the past 40 sessions, and has tacked on an impressive 28.4% year-to-date. Plus, in addition to the aforementioned $44 mark, the equity's 10-day moving average has provided a floor for the most recent string of consolidation attempts. This longer-term layer of support has given American International Group a lift higher since late April.
This article by Karee Venema was originally published on Schaeffer's Investment Research.
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No positions in stocks mentioned.