Too Many Options Highlights: Oct 8 – Oct 12

by Enis October 14, 2012 3:14 pm • Commentary

We started the Too Many Options post on Oct 8th with the goal of providing valuable color on the most active or interesting options trades each day.  Following all of the activity each day might be daunting, so we wanted to provide a weekly summary that highlights the 5 most interesting options trades of the week:

  1. AAPL – The stock ended its direct descent from the $660 breakdown.  It ended up trading between $625 and $647 the whole week, and traded a more balanced mix of calls and puts for the first time since July (as opposed to predominantly calls every week in August and September)
  2. NOK – Someone bought 44k of the Jan14 5 calls for $0.37 on Oct 1oth.  Dan detailed his thoughts on this trade in the Morning Word on Oct 11th.
  3. FXI – Someone bought 75k of the Nov 37 calls for $0.35 and $0.36 on Oct 10th, playing for a bounce in China, potentially betting on more Chinese stimulus announcements or a positive reaction to the change in leadership to Xi Jinping in November.  China was the best performing market this week (FXI up almost 3%, while SPY down 2%)
  4. S and PCS – PCS options front month options were bid early in the week as speculation that Sprint might counter-bid dominated discussions.  On Wednesday, Sprint said they could take up to 3 months to decide whether to counter-bid, crushing option implied volatility in PCS in Oct and Nov options.  On Thursday, Softbank announced a possible bid for Sprint, sending S up 15%, and the Oct and Nov 6 calls traded huge volume in S.  Meanwhile, PCS options were bid again as some speculated that Softbank was buying Sprint in order to also purchase PCS.  CLWR almost doubled on the week on the Softbank news.
  5. KRE – The main theme on Friday was weakness in financials after the WFC and JPM repot. Most concerning to financials traders was the large decline in NIM (Net Interest Margin) at WFC, indicating future earnings power concerns for commercial and regional banks.  KRE was down 3%, and one trader bought 10k of the Jan13 28 puts for $1.24 on Friday.