Facebook dominated options volumes following the company’s Q3 results and guidance which left investors a bit clueless to say the least. The stock this morning opened down 5% and then rocked to be up almost 6% in the mid afternoon, only to close up 2.5% massively under-performing the implied move in the options market.
1) FB – options traders got turned around a tad just like those trading the stock, in the morning the largest single print on the day was a buyer of 7400 Nov 16th 42 puts paying .18 to open when the stock was about $48. In all the options had a massive day with over 1.7 million contracts trading, heavily skewed to calls, where 1.08 million traded to 622k puts. The most active strikes on the day were 62k of the Nov 1st (tomo expiration) 50 calls and 39k Nov 16th 52.50 calls.
2) EWZ – The ETF that tracks Brazil’s Bovespa doing its best to hold above key technical support at its 200 day moving average (closed just on it), a trader just before noon bought 49k of the Jan 45 puts for .68 to open. Break-even on this trade on Jan expiration is $44.32, down almost 12%.
3) JDSU-not a name that we see a ton of options activity in, but with the stock down 11% on disappointing earnings, a trader put on a bullish trade looking for a bounce to $16 by June expiration. A trader bought 14k June 14 calls for 1.54 to to open and sold 14,000 June 16 calls at .82 and 14,000 June 17 calls at .60 to open, This structure is sometimes referred to as a ” call tree” buying one strike and then selling 2 different higher strikes
4) GM – looks like a trader sold 25k Jan 37 calls to close at 2.35, and bought 30k of the Jan 39 calls for 1.37 to open, so a rill up. Interesting to not that the stock is approaching a huge technical resistance level at about $38 which it had previously failed at 2 other times this year in July and in Sept (see chart below). The U.S. govt which is still the company’s 3rd largest shareholder has indicated that they will accelerate the pace in which they are exiting their stake, this could happen by year end. The Canadian Govt which is the 2nd largest shareholder, who also recently sold stock could join the party which could put a cap the shares near term, but if there was ever a clean up trade to be had it would be on the exit of the bailout holders.
5) CAT – A trader bought 16k May 70/