Too Many Options –

by Kristen October 23, 2012 4:28 pm • Commentary

On a day that saw big market weakness in the first hour of trading, and then choppy trading into the close, here are the large trades and heavy volume, that stuck out to us in the options market:

  1. MNST – Monster Beverage is reaching highs in implied volatility and down 10% today. MNST was downgraded yesterday from conviction buy to buy by GS. A suit was filed last week in Maryland about the heart arrhythmia death of a 14-year old girl who had been consuming Monster energy beverages. There was a story in the NYTimes regarding 5 deaths over the past 3 years that supposedly the FDA has been looking into of people who died after drinking Monster Energy drinks. Over 50K options have traded versus an average of a little over 8K. The ratio of calls to puts was 1:1.7. Looks like a big spread went up in the March 42 calls, 55 calls, and 35 puts. The prices make it look like the 42 calls were bought and the 55 calls and 35 puts were sold. The open interest on these lines was minimal. Earnings in the stock are Nov 7th. The stock could continue to be volatile based on how the suit develops and if any other suits come forward.
  2. YHOO – almost 250K options have traded versus an average of about 61K. They reported earnings yesterday and the conference call with new CEO Marissa Mayer was considered positive for the future outlook. The stock was upgraded by Susquehanna and the target increased at Bernstein. Stock was trading up 6%. The biggest individual trade was almost 20K Nov17 16 puts which traded for 16 cents.
  3. FB – high option volume today with earning after the bell. Biggest trade was a put spread done 15,500 times in the Nov17 16/19 puts. It looks like the put spread was bought. The at-the-money Oct26 straddle was trading $2.50 with stock $19.50 so implying almost a 13% move.
  4. NOK – had almost twice the normal option volume today. Stock was lower on the announcement of a convertible bond offering and some analysts’ negative forecast for the future. Nokia is coming out in China in November with the Lumia 920 powered by MSFT’s Windows 8.
  5. NFLX – has earnings after the bell. Almost 80K options have traded versus an average of 48K. No particular large trades. The ratio of calls to puts was 1.6:1 versus an average of 1.1:1.
  6. ETFC – has a large call trade go up in the Jan17’15 10/17 calls with little to no open interest on the lines. That was 20K of the 27K options that traded versus an average of a bit over 4K. Stock was down Friday after a surprise earnings loss.
  7. COH – Coach, was up 8% after earnings before the open and implied vol in the Nov at-the-money’s has come in over 18%. 47K options have traded versus an average of 14K. Earnings were good buoyed by sales up 40% in China.
  8. UPS had high option volume at over 52K, 2:1 calls to puts, versus an average 11k after well-received earnings this morning plus good Fedex guidance that they expect holiday shipments to be up 13% compared to 2011.  Stock was up 3%.
  9. PBR – Petroleo Brasileiro Petrobras, over 18K Dec22 calls traded with less than 1000 open interest on the line.  Earnings are 10/26. They recently found oil off the coast of Sao Paulo, in ultra-deep waters of Santos Basin, at a water depth of 2,152 meters, 275 km.