Too Many Options – Feeling Gravity’s Pull

by Kristen February 21, 2013 7:45 pm • Commentary

The market opened down, following through on a rough day yesterday, tested the 1500 level in the SPX several times and settled just above at the close. Here are some of the notable trade in options we saw:


SWY – earnings were this morning, stock finished up 14% and IV30 came in almost 12%.  Over 22K of the Mar 20 puts traded.  Looks like was mostly buys.  Perhaps someone buying back a winner after shorting them into earnings.

MPEL – Melco Crown Entertainment, which owns Macau casinos – high volume today of 25K+ options versus an average around 7.5K.  The Apr 22 calls traded 7300 times with the Apr 20’s which traded 5400 times.  The 22’s had sufficient open interest.  The Mar 19 calls and 18 puts also had significant action.  IV30 is up 2.5 points and the implied vol has had an upside skew since mid-February.

mpel skew
Courtesy of LiveVol

The potential for China to legalize mainland gambling was in the news.

AIG – earnings after the bell.  Over 152K options changed hands.  The most trading was in the Mar16 36/39 put spread, which traded around 12K times.  The May 42 calls also traded over 12K times.  IV30 was up 12%.

NXY – almost no other trading except for 20,601 Mar 27 calls.  Open interest is plenty on the line.

CHK – had earnings this morning.  Buyer of 12,000 Jan’14 15 puts.  Open interest sufficient on the line.  Recent news here had been questions of misconduct for outgoing CEO who was cleared by the board of wrongdoing yesterday.

VIX – all kinds 0f action.  It even popped over 16 for a minute before closing at 15.22. There was more trading in the Mar20  20/25 call spread.  The Apr 13/14/15 put butterfly traded somewhere around 10K times.  Overall the Mar20 20 calls traded over 64K times, the Mar20 15 calls over 44K, the Apr 13, 14, and 15 puts traded almost 20K, 36K+, and 22K+ respectively.  The Mar20 32.5 calls traded in a spread with the Apr  30 calls. The Apr 30 calls traded over 50K times.  Other big lines were the Apr 24 calls with almost 30K trading and the Mar 14, 15 and 16 puts with 30K+, 48K+, and 32K+ trading respectively.

ADP – had a big opening buyer of the Apr 62.5 calls with over 3000 trading in a product that averages a little over 1000 options a day.  Stock has recently reached a new high.

YOKU –   lots of action in the Mar 24 calls today. IV30 was up almost 10% today.  Earnings are after the close on February 28th.

EFA and EEM – someone sold the EFA Mar 54/57 put spread at .41, 10,000x, to close and EEM a trader sold 25K Mar 43 puts at $.63 to close.  As Dan noted in QuickHits, “It looks like traders monetizing bearish bets.”

TSLA – someone bought 17,500 of the Jan15 18 Puts, a longterm bearish play. Stock had earnings yesterday after the close and was trading down $3 1/3.

FXI – 50K Mar16 39.5 puts traded.  Open interest was sufficient for it to be closing, but was tied to stock.  25K Mar16 38.5 puts traded as well. These look opening.

HSH – 25K July 34/39 call spreads traded.  It looks like they were bought opening.  Hillshire brands is described as “a meat-centric food solutions company.”  Ah meat, the cause and solution to all life’s problems.