Relatively Heavy Call Activity on Bank of America Corp (BAC), Apple Inc (AAPL), Morgan Stanley (MS)

08/25/2009 12:01 am EST

Focus: OPTIONS

Nick Perry

Equity Options Trader, Schaeffer's Investment Research

Here are the stocks seeing a bias toward call activity on Friday. This filtered scan is based on the International Securities Exchange (ISE) buy-to-open data. It looks for stocks where the previous day's call volume on the ISE is at least twice as great as the put volume. It then sorts the stocks based on the call volume. Since this is buy-to-open data, this can be a good source for finding stocks where optimism is emerging. Of particular interest to me would be situations where we see call activity on stocks that are still in intermediate-term downtrends. This would be a potentially cautionary sign from the contrarian perspective.

Bank of America Corp (BAC), Apple Inc (AAPL), and Morgan Stanley (MS) are the charts that stood out to me:

  • When I last looked at Bank of America (BAC), I said I thought it was a crowded long trade. A look to the updated chart shows my concerns were unfounded. The stock was able to push through resistance and then staged a successful retest of that zone.

  • The last look at Apple's (AAPL) intraday chart showed a breakout. It was followed by a quick drop, but the stock immediately recovered. The daily chart shows the equity is once again trading above the most recent congestion and locked in a steady uptrend.

  • The weekly chart of Morgan Stanley (MS) is something to keep an eye on. The shares have been trending steadily higher since November and are bumping into resistance near 32. The first test of this overhead impediment in June was followed by a mild rejection. The stock is now right back at this resistance.


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By Nick Perry of Schaeffer's Trading Floor Blog

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