Too Many Options – $AAPL Pop

by Kristen February 7, 2013 7:51 pm • Commentary

The most interesting headline of the day hit this morning, with AAPL opening higher on this news:

(Reuters) – Apple Inc. on Thursday confronted its first major challenge from an activist shareholder in years as hedge fund manager David Einhorn’s Greenlight Capital filed suit against the company and demanded that it dole out a bigger piece of its $137 billion cash pile to investors.

AAPL sold off from its morning highs only to pop later in the day on this:

Apple Says in Talks About Returning Cash to Holders 15:39
Apple management, board in active talks about returning cash to holders


1. APPL – the Feb08 weekly 460 and 465 calls were the most active lines in the market with 53, 539 and 50, 931 trading respectively.  Stock was up almost $11.  Today is the ex-dividend date.

2. ELN – a neuroscience biotech with an average of 4K options trading a day. The Jan ’14 10 puts and the Jan ’14 10/12 call spread went up 50K and 25K.  The puts look like a sale, and the call spread may have been sold.  Open interest in the lines was negligible and only one other line has open interest even near 10K.

3. BAC – a seller of 20K Apr 11puts.

4. AKAM – down $6 on earnings and IV30 in 22 points.  10x the volume average with 59K+ options trading.

5. VMED – buyer of over 12K Jun 43 puts.  Small open interest on the line.  Seller of almost 6K Jun 25 puts also small open interest.

6. CSTR – high volume into earnings. Over 76K options trade versus an average under 5K.  Biggest trade was a buyer of the Feb 57.5/62.5 call spread 4500 times.

7. OPEN – also had earnings after the bell.  16K options trading versus an average just over 1K. Looks like a fair number of upside call butterflies trading.

8. TLM – another big day in the July 15 calls with 20, 995 trading.  Mostly buys.  As I mentioned in QuickHits yesterday, this stock is often the subject of acquisition rumors.

9. MCO – has earnings tomorrow before the open.  Earlier in the week had a fall in stock and rise in volatility with news of the suit against McGraw-Hill.  Over 18K options traded today versus an average of 1800.  Call to put ratio 1:2.9.

10. RVBD – always an exciting earnings stock.  28K options traded versus an average of 3K. Over 11K Feb 22 calls traded.  Implied vol in the at-the-moneys was 108.