Too Many Options 11/14/13: $CSCO, $EMC, $LOW, $XOP, $XLF, $VIX

by Dan November 14, 2013 4:17 pm • Commentary


  1. CSCO –   stock got drilled today, down nearly 11% on what amounted to disastrous revenue guidance for the current quarter, below the 4% yoy consensus for growth to down 8-10%. Options activity was massive today int he name, trading almost 6x normal volume, with the most active strike the Jan 24 calls, with 42k trading on the day, with a block of 25k of the Jan 24/27 call spread sold to close at .06.  While there appeared to be plenty of traders closing bullish, losing upside calls, I did not see too many traders initiating new positions playing for a bounce.  Shortly after the opening there was a closing seller of 12k of the Dec 22 puts at .98 taking profits or monetizing a hedge.
  2. XOP – A large roll down and out in the Oil & Gas/E&P etf as a trader sold 15k Nov 72 puts at 2.75 to close and bought 30k Dec 67 puts for 1.53 to open.
  3. XLF – looked like a fairly big roll in the morning as a trader sold 192k Dec 20/18 put spreads at .08 to close and bought 162k Feb 19 puts for .20 to open when the stock was $20.95 at 11:39am.
  4. LOW – closed at new all time highs today.  A trader rolled a bearish bet or hedge out and down by selling 26k Nov 45 puts at .01 to close and bought 25k Dec 44 puts for .205 to open.
  5. EMC – enterprise technology providers took it on the chin today in sympathy with CSCO as stocks like EMC were down 2% on the day.  Shortly after the open a trader sold 27k EMC Jan 25 calls at .39 to close vs open interest of 102k in the strike.
  6. TEVA – one of the few biotechs not sporting fabulous gains.It has been quite volatile of late with a big gap lower last month.  A trader today was drawing a line in the sand just below the recent lows by selling puts to buy calls, better known in options trading circles as a Risk Reversal.  The trade in that I am speaking of was in June where the trader sold the June 35 put and bought the June 40 call and paid .30 for the structure against what looks like  340k shares sold at $38.45.  This could have been a stock replacement trade where the owner of stock now gets long on June expiration at 35.30 on the downside or at 40.30 on the upside.
  7. VIX – saw its second day of fairly interesting way out of the money call buying.  Two trades caught my eye, first:  trader bought 40k March 23 calls for 1.325 and the second a trader bought 30k Jan 23/32.5 call spreads for .45