Posts Tagged ‘Options Volume’
Tuesday, February 15th, 2011
Yum! Brands (NYSE:YUM) is looking to shed two of its less-iconic brands (Long John Silver’s and A&W) but a long-term investor seems to be adding to his or her own bearish position by scooping up LEAP ratio put spreads. The January 2013 40 and 45 puts were active on Monday and it was the second time since late January we have noticed unusually large volume at these strikes.
Yesterday, as the stock was moving modestly higher to an eventual close of $50.30, an investor apparently sold 3,600 of the January 2013 40 puts, as they traded on the bid price of $3.00 apiece. At the same time, a block of 2,000 of the January 45 puts traded on the ask price of $5.00 each, suggesting they were initiated on the buy side. This spread likely traded with stock, but probably only to aid in its execution.
What is especially interesting about this trade is not even the long-term nature of the play or the 1.8 ratio at which it traded, but the fact that the same strikes saw similar action on January 27. On this day, it looks as though 8,000 of the 40 puts sold for $3.70 each while 5,000 of the 45 puts were bought for $5.90 each. If it is the same investor, they may just be adding to this position with a similar trade fewer than three weeks later. (more…)
Tags: LEAPS, options trading, Options Volume, Ratio Put Spread, YUM, Yum Brands
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Wednesday, January 12th, 2011
Duke Energy (NYSE:DUK) lost some ground Tuesday following an analyst downgrade. RBC Capital cut its rating on the shares to “sector perform” from “outperform” and kept its 12-month price target at $19. The stock is currently trading around $17.50, so this target still allows for modest upside over the next year.
Over the past 12 months, DUK is little changed, up 3%. The stock was flagged on the OptionsHouse Hot List on Tuesday, however, and it appears as though at least one investor expects the shares to break free of this sideways trend and head higher. They evidently expressed this outlook by selling puts and simultaneously buying calls (otherwise known as a synthetic long stock strategy). (more…)
Tags: DUK, Duke Energy, options trading, Options Volume, Synthetic Long Stock
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Tuesday, December 21st, 2010
The February options series opened for business in Wells Fargo (NYSE:WFC) yesterday and one large-scale options investor appears to have swooped in to extend a bearish trade. Wells shares are up 9.5% in the past month and have gained slightly more than that year-to-date, but this investor evidently expect the banking giant to experience some moderate downside during the next couple of months.
In mid-session trading on Monday, large blocks traded on the January 27.50 put and the February 25 and 28 puts. Looking at volume, open interest, and pricing trends, it appears as though the January puts were sold to close while a bear put spread was opened in the February series. All of the volume changed hands right around the same time and all of the activity was marked as spread trading. (more…)
Tags: Bear Put Spread, options trading, Options Volume, Wells Fargo, WFC
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Thursday, October 21st, 2010
American Airlines parent AMR Corp. (NYSE:AMR) and Delta Airlines (NYSE:DAL) were active among option traders yesterday after their respective earnings reports. AMR investors seem to be looking for way downside hedges in the long term while Delta traders were apparently targeting short-term upside.
In early-morning trading, blocks of 19,900 contracts traded at the AMR 2012 5-strike put and the 2013 4-strike put. Both blocks traded at the same time and were marked as spreads. We believe the investor bought the later-dated, lower-strike puts for 84 cents apiece and sold the higher-strike puts for 81 cents apiece. (more…)
Tags: AMR, AMR Corp., DAL, Delta Airlines, Long Call, Long Put, Options Volume
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Tuesday, October 19th, 2010
An investor seems to have high long-term hopes for NVIDIA (NASDAQ:NVDA) and apparently expressed this belief early Monday with a large purchase of out-of-the-money LEAPS calls. NVDA is a semiconductor company and the inventor of the graphics processing unit (GPU) technology.
The shares have starkly underperformed the broad market this year, down 39% year-to-date compared with a 9% increase in the tech-rich Nasdaq Composite. The shares hit a 52-week low of $8.65 in early August and have rebounded 31% since. Perhaps the bull who charged out of the gates on Monday believes this trip to single-digit territory could be an ultimate low for the shares.
Shortly before 11:30 a.m. Eastern Time, with the stock virtually unchanged on the day, two large blocks traded at the January 2012 17.50 call. The blocks consisted of 14,500 and 29,490 contracts and changed hands for 72 cents per contract. This was the ask price at the time, which is typically reflective of buying action. (more…)
Tags: LEAPS, Long Call, NDA, NVIDIA, Options Volume
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Monday, September 27th, 2010
Airline stocks were active on the OptionsHouse Hotlist today, perhaps due to a big merger announcement in the sector. Southwest Airlines (NYSE:LUV) announced plans to acquire AirTran Holdings (NYSE:AAI) for $7.69 per share, or about $1.4 billion overall in cash and stock. This is a premium of roughly 69% over AirTran’s closing price on Friday.
The deal brings Southwest service to the Atlanta market will also reach destinations in the Caribbean and Mexico. It is expected to close during the first half of next year.
This merger news has the airline sector hot today with notable options action in two Southwest peers: AMR Corp. (NYSE:AMR), the parent of American Airlines, and US Airways Group (NYSE:LCC).
(more…)
Tags: AMR, AMR Corp., LCC, LUV, Options Volume, Southwest Airlines, US Airways
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Thursday, September 23rd, 2010
I’d like to share a quick update on a large eight-part options trade we saw in the CBOE SPX Volatility Index (VIX) yesterday. A trader appears to have bought to close 23,000 October 24/26 call spreads (buying the 24 calls and selling the 26 calls) for a net debit of 60 cents.
Looking at historical data, it appears these same spreads were sold to open back in August for a credit of $1.20. Excluding commissions, the investor appears to have booked a profit of 60 cents for each call spread (the initial credit less today’s premium paid). (more…)
Tags: CBOE Market Volatility Index, Options Volume, VIX
Posted in Advanced Trading, blog | No Comments »
Wednesday, September 22nd, 2010
Bank of America (NYSE:BAC) may look as though it is headed higher from a late-August bottom, but one options trader isn’t sure if the shares will continue moving higher or will snap back lower. They do appear to expect a dramatic move, however, and seem to have expressed that thesis by scooping up longer-term long straddles.
Shortly after 1:00 p.m. Eastern Time yesterday, a block of 2,000 May 14 calls traded at the same time as 2,000 May 14 puts and the transactions were indeed flagged as a spread. The calls changed hands for $1.55 a piece (the ask price at the time) and the puts traded in the middle of the market for $1.72 per contract. (more…)
Tags: BAC, Bank of America, LEAPS, Long Straddle, Options Volume
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Monday, September 20th, 2010
It appears that an institutional options trader has placed a limited-bullish bet on shares of Walgreen Company (NYSE:WAG) today. The trading weapon of choice is front-month, out-of-the-money puts. The October 27 put has seen 35,000 contracts change hands today, compared to open interest of just 1,252. Based on this disparity, most likely these options are trading to open.
At roughly 10:50 a.m. Eastern Time, one block of 34,300 puts traded at the mid price of 17 cents per contract. If these puts were sold, as our data suggests, this amounts to $583,100 in premium collected (the per-contract price times 100 times 34,300). (more…)
Tags: Options Volume, Put Selling, WAG, Walgreen
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Wednesday, September 8th, 2010
Ford Motor (NYSE:F) shares drifted lower along with the broader market Tuesday, down roughly 2.2% to $11.80, breaching the 12 strike. Perhaps seeing this is a buying opportunity, a large-scale investor put on a bullish intermediate-term trade to bank on upside through the end of the year.
The December 12 and 13 calls both saw nearly 15,000 contracts change hands yesterday. A series of large blocks hit the tape in rapid succession within the first hour of trading. The 12-strike calls traded at an average price of $1.02 per contract, which was at or near the ask price at the time. The further-from-the-money 13 calls traded in similar blocks for 57 cents apiece (at or near the bid price). (more…)
Tags: Bull Call Spread, F, Ford Motor, Options Volume
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