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Apple Tops List of Stocks With High Options Volume


Surprises on the list include Constellation Brands, Freeport-McMoRan Copper & Gold, and Potash Corp.

My firm thought it would be interesting to see the stocks that have been traded the most on the option floor so far this year -- and the results weren't all that surprising. Thanks to Schaeffer's Senior Quantitative Analyst Rocky White, we are able to present the top five traded stocks on the option floor. The one interesting thing is that all five are ranked in the same order for call volume, put volume, and overall volume.

Apple Inc. (NASDAQ:AAPL) is atop the list, again no surprise. The other four names on the list above are also not shockers to most option traders either (caveat: this is only for individual equities -- many ETFs have higher option volumes). Here's the list:

So we dug deeper (Rocky pulled all optionable equities through the end of Wednesday -- there are a total of 2,703 tickers that trade options, in case you were interested). The goal was to come up with some interesting names being traded more than people may realize. Here's what we came up with:
  • Constellation Brands, Inc. (NYSE:STZ): The wine producer/alcohol importer had the 17th-highest amount of puts at just over 1.1 million, and just recently joined the heavily-traded list. That's because in addition to making and distributing such wine brands as Clos Du Bois, Blackstone, and Ravenswood, STZ also helps import and distribute other foreign brands such as Corona beer. And the maker of that beer, Grupo Modelo SAB de CV (PINK:GPMCF), is part of a $20.1 billion proposed merger with Anheuser-Busch InBev NV (ADR) (NYSE:BUD). So speculators are clearly trying to cash in on the potential outcome of the merger. But even before news of the deal hit, Constellation had been on a steady climb since mid-2012, even overcoming a huge drop earlier this year when the US Department of Justice voiced opposition to the original merger proposal. BUD and Grupo Modelo amended their proposal to help soothe regulators' concerns, agreeing to sell off the Corona brand. STZ immediately picked up where it left off, as it is a major distributor of the most popular imported beer in the US. STZ shares are now currently trading near their all-time highs ($47.82 set on Wednesday), with Constellation Brands nearly doubling in the last 12 months. As for option sentiment, it appears fairly bullish, with Constellation Brands' Schaeffer's put/call open interest ratio (SOIR) standing at 0.82, which is in the bottom 27% of similar readings taken in the last year. In other words, investors are more call-heavy in recent trading. But STZ is starting to venture into "overbought" territory, with its 14-day relative strength index standing at 66, and it has traded above its upper Bollinger Band several days this week as part of its recent spike.
  • Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX): This mining company did hit the radar earlier this week as one of the most actively traded stocks on the option market. But FCX has otherwise not been in the option news much, even though it is 15th on the list of call volume, with 1.94 million call trades since the beginning of the year. The stock has had an interesting ride lately, dropping 19.5% over two days in early December after news broke of the company's intended purchase of Plains Exploration & Production Company (NSYE:PXP) and McMoRan Exploration Co. (NYSE:MMR). The total deal is worth roughly $9 billion in cash and stock. FCX shares recovered somewhat, but are still down 3.5% on the year, and off about 14% from this same time last year. Yet option traders appear bullish on Freeport-McMorRan nonetheless, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing a 10-day call/put volume ratio of 3.22, which means traders are buying more than three calls to open for every put. In addition, that stands in the top 8% of readings taken in the last year, meaning that calls are being bought to open at a clip that is nearing an annual high. From a contrarian view, however, that could be a sign of overconfidence and could provide pressure on the stock if those bulls have to unwind their positions in case of continued price drops.
  • Potash Corp./Saskatchewan (USA) (NYSE:POT): The agricultural chemical producer wound up in the top 42 companies in overall volume, with nearly 1.5 million total options traded so far this year. POT routinely shows up as one of the most heavily traded stocks in general on the New York Stock Exchange, but is relatively sleepy for a high-volume option play. It has only ranged between about $37-$44 since hitting a six-month low of $36.94 on November 16. Since recovering from that swoon, Potash Corp. took another dive in mid-February and has struggled to keep up with its 30-day moving average ever since. POT is down 2.6% on the year, but has dropped more than 13% during the last 52 weeks. Yet option traders don't appear terribly optimistic. The SOIR for Potash stands at 0.92, and that is in the 90th percentile of readings in the last year. So put open interest among options that expire in the next three months is nearing an annual high, as compared to call open interest.
In case you are interested, there were 24 eligible stock tickers with no option volume so far this year. IXYS Corporation (NASDAQ:IXYS) and LSI Industries, Inc. (NASDAQ:LYTS) brought up the rest of the bunch with a total of one put traded apiece.

This article by James Pilcher was originally published on Schaeffer's Investment Research.

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