3 Stocks to Watch: Corning, Freeport-McMoRan Copper & Gold, and General Electric

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Today's column includes a look at a rise in call trading on Corning ( GLW ) and General Electric ( GE ), while put trading jumped on Freeport-McMoRan Copper & Gold ( FCX ). Each day, 3 Stocks to Watch focuses on stocks seeing heavy options trading and gives you a unique insight into each stock's sentiment backdrop.

Corning ( GLW )

Options players jumped on Corning Inc. ( GLW ) on Wednesday, as more than 90,800 contracts crossed the tape. This surge in volume was more than seven times the stock's average daily trading volume of 12,951 contracts, according to data from WhatsTrading.com. In addition, traders were feeling somewhat optimistic, as 88% of the volume changed hands on the call side.

Call trading has been brisk on the shares recently. The International Securities Exchange (ISE) and the Chicago Board Options Exchange ( CBOE ) have reported 16 calls purchased to open for every one put purchased to open during the past 10 trading sessions. This ratio of calls to puts is higher than all other readings taken during the past year, pointing to an extreme in optimism.

Meanwhile, the Schaeffer's put/call open interest ratio (SOIR) for GLW comes in at 0.57, which is higher than 54% of all those taken during the past 52 weeks. This ratio indicates there is a slight bearish bias among options players at the moment, but the recent emphasis on call buying could be a signal that sentiment is shifting toward the bulls' camp.

Elsewhere, we find that Wall Street is optimistic toward the shares. According to Zacks , we find that 13 of the 18 analysts following GLW rate it a "buy" or better.

Technically speaking, the shares of GLW are rising along the support of their 10-week and 20-week moving averages, gaining ground since mid-September. The stock has recently stalled at round-number resistance at the 20 level.

 WEEKLY CHART OF GLW SINCE JANUARY 2010 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

Freeport-McMoRan Copper & Gold ( FCX )

Freeport-McMoRan Copper & Gold Inc. ( FCX ) reported this morning that its fourth-quarter profit rose to $1.5 billion, or $3.25 per share, from $971 million, or $2.15 per share, in the year-ago period. Revenues rose 21.5%, to $5.6 billion. Earnings and revenue figures both exceeded estimates. Analysts had expected profit of $2.97 per share on revenue of $5.35 billion.

FCX was the center of some brisk options trading on Wednesday ahead of the earnings report, as more than 94,200 contracts changed hands. This jump in volume was more than double the equity's average daily trading volume of 39,993 contracts, according to data from WhatsTrading.com. What's more, approximately 60% of the volume changed hands on the put side.

In fact, pessimism has been running high on FCX. The ISE and CBOE have reported 1.3 puts purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 87% of all those taken during the past 52 weeks.

Meanwhile, the SOIR for FCX comes in at 2.29, as put open interest doubles call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 98% of all those taken during the past year. In other words, short-term options players have been more pessimistically aligned only 2% of the time during the past year.

Short interest is also building toward the security. During the past month, the number of FCX shares sold short increased by 2.6% to 14 million. This accumulation of bearish bets accounts for 3% of the company's total float.

Meanwhile, Wall Street remains enamored of the company. According to Zacks , the stock has earned 13 "buy" ratings, two "holds," and one "sell."

From a technical perspective, the shares of FCX slumped badly this morning, dropping more than 4%. Until today, FCX had been in a strong uptrend along the support of its 10-week and 20-week moving averages. The stock today breached the support of its 10-week trendline.

 WEEKLY CHART OF FCX SINCE JANUARY 2010 WITH 10-WEEK AND 20-WEEK MOVING AVERAGES

General Electric ( GE )

Options traders turned their focus to General Electric Company ( GE ) on Wednesday, as more than 232,100 contracts changed hands. This surge in volume was more than double the stock's average daily trading volume of 110,783 contracts, according to data from WhatsTrading.com. Meanwhile, roughly 70% of the volume changed hands on the call side.

Call trading has picked up on the ISE and CBOE recently. During the past 10 trading sessions, 3.6 calls have been purchased to open for every one put purchased to open. This ratio of calls to puts is higher than 80% of all those taken during the past 52 weeks, indicating a growing optimism.

However, the SOIR for GE comes in at 1.05, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 69% of all those taken during the past year, showing that there is still ample room for optimism to grow toward the shares.

Wall Street has a slight bullish bias toward the shares. Out of 16 analyst rankings, the stock has earned nine "buy" ratings, according to Zacks .

Technically speaking, the shares of GE are approaching their April 2010 highs with help from their 10-week and 20-week moving averages. However, one concern is that the shares have dropped below the support of their 10-day and 20-day moving averages, which had been guiding the equity higher since the beginning of December.

 DAILY CHART OF GE SINCE NOVEMBER 2010 WITH 10-DAY AND 20-DAY MOVING AVERAGES

Trading the News: A Contrarian View. Check out this special report from Bernie Schaeffer here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: CBOE , FCX , GE , GLW

Schaeffer's Investment Research

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