Too Many Options 11/7/13: $AIG, $IWM, $MSFT, $P, $EBAY

by Dan November 7, 2013 4:07 pm • Commentary

1. AIG – stock continues to decline, now down 8% since its earnings results last week and now essentially trading at the low from early October.  A trader made a fairly large upside bet in the insurer buying the May 50/55 1 x 1.5 call spread, buying 50k of the May 50 calls and Selling 75k of the May 55 calls, while also selling 500k shares of stock at $48.

2. IWM – near the lows of the afternoon it looked like a trader took off a hedge or an outright bearish trade by selling 59k Nov 106 Puts at .58, not tied to stock, look to be closing trade with 72k trading in total vs open interest of 104k.

3. ZNGA –  traders selling short dated calls to close, with more than 35,000 Nov 4 calls trading btwn .05 and .07, most look closing vs 50k open interest in the strike.

4. GILD –  the biotech stock is down almost 10% since making new all time highs on Oct 30th, but still up 80% on the year.  Traders were buying puts in very decent size today with 16k of the Dec 67.5 puts trading in 3 lots of 5k for 2.80 to open.

5. MSFT –  continues to see heavy options activity with a trader rolling up call strikes in Dec and Jan.  Trader did all of the following within a few minutes of each other shortly after 10:30am:  Bought 15k Dec 37 calls for 1.37, bought 8,900 Dec 39 calls for .50, Sold 11k Jan 36 calls at 2.33 and Bought 20k Jan 40 calls for .51

6.  P –  one of the few Web 2.0 stocks to actually hang in near the highs, a trader bought 10k of the Nov 27/25.50 put spread for .60.  The choice of opening in Nov 16th expiration is curious as the company does not report earnings until Nov 21st, so maybe just a short term hedge but risking .60 to protect .90 seems a bit tight.

7. EBAY – Trader bought 23k Jan 55 calls for 1.71, 31k have traded on the day, which comes a day after rumors that Carl Icahn was supposedly taking a position in the once dominant Beanie Baby exchange.