Too Many Options 11/18/13: $TSLA, $MSFT, $FXI, $PG, $DAR

by Dan November 18, 2013 4:15 pm • Commentary
  1. MSFT – Stock was downgraded this morning at Bank Of America from Buy to Hold and Goldman Sachs reiterated there Sell rating on the stock, both fearing issues from expected management transition.  Puts were active with a buyer in the afternoon of 30,000 of the Jan2014 33/35 Put Spread for 37 cents.  While this is not exactly a bold bearish bet it could be considered some cheap protection for a long holder.  There was also a seller of 20,000 Jan 34 Puts to close at 41 cents.
  2. TSLA – Stock got drilled today, down a little more than 10%, for no apparent reason aside from the fact that the fever has broken in this mini-bubble.   There was one trader that looked to make a bullish bet when the stock was $124.41 by buying 2500 of the Jan 2015 125/165 call spread for 13.30 to open.  There was also a buyer of 2250 Jan15 80 puts, to open paying 12.00.  The put call ratio was about even at 183k calls to 191k puts.
  3. FXI – having its second monster day in a row on reforms in China, with the 2 day run equaling close to 8% .The Chinese etf saw lots of call activity….there was a buyer of the May 42/46/50 call butterfly, 5,000x for .55, also a buyer of the May 42.5/46 1×2 call spread paying .16 for 10k x 20k.  Interesting that after such a big run, traders seemed very interested in ratio spreads as opposed to outright calls of one up spreads.
  4. PG – trader buys 14,000 Jan14 87.50 calls for .62 to open and buys 12,000 Jan15 92.50 calls for 2.25 to open and sells 363,000 shares at 84.25, this could have been an investor replacing stock with calls.
  5. DAR – monster trade in a bizzare stock that I have never even heard of…..A trader closed the Jan 17.5 /22.5 1×2 Put Spread 40k, by 80k selling 40k of the 22.50s puts at 2.30 and buying 80k of the Jan 17.5 puts for .15.  This could have been protection against a long position.
  6. F – trader paid .39 for the Feb 16/20 Risk Reversal where he sold 9k of the Feb 16 Puts and bought 9k of the Feb 20 calls, paid .39 for the structure.  Trader gets long at 16.39 or 20.30 on Feb expiration.
  7. BBRY – could be long holder closing protection as the stock settles, a trader sold 22k Dec 6 puts at .30, 58k have traded on the day vs open interest of about 125k contracts in the strike.
  8. CSCO – saw some bullish activity with a trader buying 10k Jan14 23 calls for .16 to open