Traders on Monday set their sights on CF Industries Holdings,
Inc. (
CF
) and General Electric Company (
GE
). CF was popular among call players, with bullish option volume
rising well beyond typical levels. Conversely, struggling GE was
targeted by a crop of very short-term put players placing their
pre-expiration bets.
CF Industries Holdings, Inc.
CF attracted the attention of call players on Monday, with
volume accelerating to 1.32 times the usual level. Nearly 9,000
calls changed hands on CF during the course of the session,
compared to fewer than 3,500 puts.
On the International Securities Exchange (ISE) alone,
speculators on Monday bought to open 2,180 calls on CF, along with
just 121 puts. The equity's single-day call/put volume ratio of
18.02 underscores a strong preference for bullish bets over their
bearish counterparts.
In fact, traders on the ISE have rarely shown a greater appetite
for call options on CF. The stock's 10-day ISE call/put volume
ratio weighs in at 12.81, as nearly 13 times more calls than puts
have been bought to open during the past two weeks. This ratio
ranks higher than 97.6% of other such readings taken within the
previous year, suggesting that options players have scooped up
calls over puts at a faster pace less than 3% of the time.
Likewise, CF's Schaeffer's put/call open interest ratio (SOIR)
arrives at a slim 0.47, with calls more than doubling puts among
options slated to expire within three months. This ratio ranks in
the 25th annual percentile, as short-term options traders have been
more optimistically aligned just one-quarter of the time during the
past year.
Most of Monday's call buying was centered on CF's September 90
call, where about 2,000 contracts were added to open interest
overnight. This overhead call strike is now home to 6,470 contracts
in open interest.
Meanwhile, thanks to today's
merger-and-acquisition news
for sector peer Potash Corp. of Saskatchewan (
POT
), calls continue to dominate on CF. Roughly 13,000 calls changed
hands during the first half of today's session, and it looks like
traders are buying new bullish bets at the stock's August 90
strike.
Even prior to today's buyout-related boost, CF was enjoying a
bout of technical strength on the charts. The stock has cruised
higher since early June along the support of its 10-day and 20-day
moving averages, and CF's bullish gap above $88 this morning could
translate to an additional layer of technical support going
forward.
General Electric Company
Blue-chip conglomerate GE was the center of some put-buying
attention on Monday, with traders on the ISE buying to open 2,215
puts on the stock during the course of the session. By comparison,
only 1,342 calls were purchased on GE -- netting the shares a
single-day ISE put/call volume ratio of 1.65.
Taking a slightly longer-term look, GE's 10-day ISE put/call
volume ratio stands at 0.96, in the 89th annual percentile. This
elevated percentile rank reveals that traders on this exchange have
purchased bearish bets over bullish at a faster pace only 11% of
the time during the past year.
In the same skeptical vein, GE's SOIR is currently docked at
1.10, in the 90th annual percentile. In other words, short-term
options traders have been more put-heavy only 10% of the time
during the prior 52 weeks.
Monday's most active strike was the August 15 put, where 8,116
contracts were exchanged -- 73% at the ask price, suggesting they
were most likely purchased. Open interest at this strike rose
overnight by 4,077 contracts, confirming that new puts were added
here yesterday. With GE trading just shy of $16 at last check,
these soon-to-expire puts are out of the money by a slim
margin.
This rising tide of negativity coincides with a period of
bearish price action for GE. The stock tumbled below support at its
20-week and 32-week moving averages in May, and these trendlines
have since switched roles to act as resistance. In fact, the duo
recently completed a bearish cross, confirming GE's downward
momentum.
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