American International Group Inc.
) 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
. 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
on AIG isn't a new concept, per data from the International
Securities Exchange (ISE), Chicago Board Options Exchange (
), 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
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
This article by
was originally published on
Schaeffer's Investment Research
Below, find some more great content from Schaeffer's Investment
Chartist Corner: Will We Be Flat This Time 16 Years
Daily Game Plan - Bernanke Comments Spark
Bullish Traders Flock to Xerox Corporation's (
) In-the-Money Option