Too Many Options 11/6/13: $MSFT, $VIX, $EBAY, $XLF, $GE

by Dan November 6, 2013 4:05 pm • Commentary

1. MSFT –  The stock continues its run to multi-year highs, and the best performer in the Dow Jones Industrial Avg for the second day in a row.  While the price action in the stock was overwhelmingly positive, the options activity suggests traders are taking profits.  Shortly after the open, a trader sold 5600 of the Jan 35/37 call spread to close at 1.33.  Also saw traders closing more speculative out of the money call positions as someone sold 21k of the Jan 40 calls at .45 to close vs open interest in the strike of 131k, over 41k traded on the day.

2. XLF – Buyer of 28k Jan 19 Puts to close for .16, this was essentially 1/4 of the open interest in the line.

3. EMC – trader bought 25k Jan 25 calls for .38 to close vs open interest of 75k, This could have been an over-writer covering, 35k traded on the day.

4. VIX – With the fear index below $13, a trader buys 42k of the Jan 30 calls for .25, the fear index has not been above $30 since Dec 2011.

5. EWZ –  the etf that tracks Brazil’s Bovespa saw bulls peeling out of losing call spreads in Dec.  A trader sold 2 lots of 10k of the Dec 53/56 Call Spread to close at .18.   As a trader this seems like an odd sale as the etf was recently above $51, and has the propensity to have fairly dramatic moves as the 2013 range has been $57.76 on the upside and $41 on the downside.

6. EBAY – saw heavy buying in at the money calls as rumors of a Carl Icahn stake swirled. The Nov regular 52.5 and 55 strikes were the most heavily traded suggesting that those that believe the rumor feel an official announcement (or Tweet) from Icahn is right around the corner.

7. GE – stock broke out to new 52 week highs, trading at levels not seen since Sept 2008.  A fairly optimistic trader bought 19k Dec 28 calls for .23 in front of next Friday’s analyst day.  The stock is up 28% year to date, besting the SPX by 4%, these calls would break-even on December expiration up another 8.5% from current levels.