Too Many Options: $VALE, $BBRY, $GE, $MSFT, $DAR

by Dan August 12, 2013 8:21 pm • Commentary

1. VALE: the Brazilian miner has been up over 15% in the last week in a straight line, now trading at new 2 month highs and quickly approaching an important technical resistance level $16, which had been long term support prior to the March break-down. Traders are playing for a break-out as one bought 17,400 of the September 17 calls for .28, followed by another trade where someone rolled 9300 Aug 16 calls up and out to the Sept 17 calls.   30 day at the money IV was up almost 2 points today on the activity.

2.  BBRY: was up almost 11% today as the company has once again hired bankers to “explore strategic alternatives”.  As expected, short dated calls were active with 27k of the Aug 11 calls trading, 19k of the Aug 10.5 calls trading, 17k of the Aug 10 calls trading, 15k of the Aug 13 puts trading and 13k of theSept 11 calls trading.  It is interesting to note that more than half of the volume in the Aug 10, 10.50 & 11 calls appear to trade on the bid which could signal longs taking in some premium on the pop as they expect little by the way of news this week.

3.  GE: It appeared that there was a buyer of 15k of the Sept 25 calls for .18 as the same trader was selling 15k of the Dec 26 calls at .28 when the stock was $24.24.  This trade could have been closing as both lines has more than enough open interest to cover the volume.

4. MSFT: last week saw a ton of out of the money call buying in Sept, and while not to the scale that it did last Wednesday and Thursday, there were buyers back again in Sept as 9300 of the Sept 33 calls, 7300 of the Sept 34 calls and 3500 of the Sept 35 calls traded most on the offer and untied.

5. DAR: I can honestly say that I have never heard of this company before, but today there appears to be someone who has and is worried about 15% downside btwn now and Jan14 expiration.  A trader bought the Jan14 20/17.50 1×2 put spread 10k by 20k for .45, a repeat of the the activity last week where 20k by 40k of the same spread traded.  Whether this is an outright bearish bet, or a hedge against a long stock position, the strikes appear to well chosen as the 200 day moving average is ~17.80, just above the sweet spot for this position.