2010 Actives Outlook: Options vs. Stock (AAPL, BAC, RIMM, XOM, PFE, CSCO, INTC, GLD, SLV)

Posted in Options 
January 2nd, 2010

2010 is here and we wanted to take a look at the largest catalyst for options volume and how it may translate into active stock trading for the January 2010 options expiration date.  In this matter we looked solely at the closest in-the-money and out-of-the-money call options that expire on January 15, 2010 because these will expire before almost all of these companies will have reported their calendar or fiscal Q4 earnings report.  We have looked at Apple Inc. (NASDAQ: AAPL), Bank of America Corp. (NYSE: BAC), Research in Motion Ltd. (NASDAQ: RIMM), Exxon Mobil Corp. (NYSE: XOM), Pfizer Inc. (NYSE: PFE), Cisco Systems, Inc. (NASDAQ: CSCO), and Intel Corporation (NASDAQ: INTC).  We even wanted to look at this in the metals of gold and silver ETFs via the SPDR Gold Shares (NYSE: GLD) and the iShares Silver Trust (NYSE: SLV).

We have then converted what each options contract series means in control of share exposure on a fully leveraged basis versus the average daily volume.  The CBOE VOLATILITY INDEX closed out 2010 under 20.0, meaning it is at least in theory very cheap for speculators to use stock options for exposure.

Apple Inc. (NASDAQ: AAPL) $210.73; Avg. Daily volume 18.3 million shares.  Apple does not look like much, but if you will go back to last Monday the readings of speculative options trading was literally off the charts with the equivalent of more than 14 million shares in options trading on a fully leveraged basis.
CALL$    OpInt    Share Equivalent
$210.00    59,605    5.96 million
$220.00    60,598    6.05 million
$230.00    36,605    3.66 million

Bank of America Corp. (NYSE: BAC) $15.06; Avg. Daily volume 201 million shares
CALL$    OpInt    Share Equivalent
$16.00    297,920    29.7 million
$17.50    297,065   29.7 million

Research in Motion Ltd. (NASDAQ: RIMM) $67.54; Avg. Daily volume 17.7 million shares
CALL$    OpInt    Share Equivalent
$70.00    61,526    6.15 million
$75.00    41,724    4.17 million
$80.00    103,290    10.3 million

Exxon Mobil Corp. (NYSE: XOM) $68.19; Avg. Daily volume 23.5 million shares
CALL$    OpInt    Share Equivalent
$70.00    81,379    8.13 million
$75.00    104,424    10.4 million
$80.00    70,442    7.04 million

Pfizer Inc. (NYSE: PFE) $18.19; Avg. Daily volume 52.8 million
CALL$    OpInt    Share Equivalent
$17.50    211,372    21.1 million
$19.00    102,084    10.2 million
$20.00    217,542    21.7 million

Cisco Systems, Inc. (NASDAQ: CSCO) $23.94; Avg. Daily volume 40 million shares
CALL$    OpInt    Share Equivalent
$22.50    44,248    4.42 million
$24.00    65,232    6.52 million
$25.00    132,091    13.20 million

Intel Corporation (NASDAQ: INTC) $20.40; Avg. Daily volume 61.3 million shares
CALL$    OpInt    Share Equivalent
$20.00    252,618    25.2 million
$21.00    97,351    9.73 million
$22.50    72,696    7.26 million

We also see this in both key metal ETF’s which track gold and silver prices, although these of course are metal price exposure plays rather than anything related to stocks:

SPDR Gold Shares (NYSE: GLD) $107.31; Avg. Daily volume 20.7 million shares and the equivalent of more than 46 million shares in options on a fully leveraged basis:
CALL$    OpInt    Share Equivalent
$100.00    66,713    6.67 million
$105.00    44,346    4.44 million
$110.00    74,437    7.44 million
$112.00    38,853    3.88 million
$113.00    22,898    2.28 million
$115.00    77,528    7.75 million
$116.00    27,953    2.79 million
$117.00    27,933    2.79 million
$120.00    88,176    8.81 million

iShares Silver Trust (NYSE: SLV) at $16.54; Avg. Daily volume 12.1 million shares; this comes to over 40 million shares on a fully leveraged basis:
CALL$    OpInt    Share Equivalent
$14.00    74,986    7.49 million
$15.00    15,300    1.53 million
$16.00    38,815    3.88 million
$17.00    74,446    7.44 million
$18.00    49,232     4.92 million
$19.00    128,848   12.8 million
$20.00    37,576    3.75 million

I would like to personally invite you to join in with the thousands of readers on our free daily email distribution list from 24/7 Wall St. to hear about ongoing day trader and options trader alerts, analyst upgrades and downgrades, stock and market rumors, Buffett and guru investor news, M&A and IPOs, and more.

JON C. OGG
January 2, 2010

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