Too Many Options 11/19/13: $VIX, $EEM, $FXI, $XOP, $TSLA

by Dan November 19, 2013 4:00 pm • Commentary

1. VIX – 2 massive trades on an otherwise quiet day that saw the VIX rise to the highest levels in more than a week.  Shortly after 10am when the index was 12.91, a trader bought 100,000 March 23 calls for 1.30. Shortly after that when the index was up a few pennies to 12.96, there was another large trade where a trader bought 100,000 Feb 20/28 call spreads for 1.04.

2. EEM – The ETF has had a heck of a few trading days on the heels of the reforms announced in China, up 5% since Nov 13th.   There was a large closing seller of 47,500 Dec 37 puts at .08 vs open interest of 149k in the strike.

3. FXI – Despite a slightly down session overnight in China (both Hong Kong and Shanghai) the etf that tracks the FTSE China 25 Index saw its second straight day in healthy call activity, again primarily in spreads or ratios by those looking at directional bullish trades.  Like yesterday, another call butterfly traded, this time in Dec as opposed to May, the trader bought the Dec 41/44/47 Call Butterfly, 5k by 10k by 5k for .38.  There was also a buyer of the Jan 41/50 1×2 call spread 10k by 20k, paying 1.24 and selling 100k shares of stock at 39.90.  In the 3pm hour there was a large buyer of the Dec 41/44 call spread paying .56 for 34,500 to open.

4. XOP – The SPDR Oil & Gas etf saw closing sellers of Dec puts on the continued weakness in Crude oil which is down 17% from the 2013 highs.  There was a seller of the Dec 65 puts in 2 lots of 5k btwn 1.27 and 1.61 to close, totally a bit more than 16k on the day in the strike vs open interest of 22k.

5. TSLA – with the stock stabilizing a bit after yesterday’s bloodbath of 10% declines, a trader rolled up call strikes in Jan by selling 4k Jan 190 calls at .69 to close and bought 4k Jan 160 calls for 2.59 to open.

6. BBY – stock down 10% on a messy quarter and guidance, a couple trades caught my eye.  Shortly after the open, a trader bought the Dec 41/44 1×3 call spread, 5k by 15k for no premium.  Btwn 41 and 44 the trader can make up to 3.00, but can quickly start to lose above 44 as they are short 2 more calls than they are long.  In another trade, the buyer was looking above the high on the year of $44.66 where they bought the Feb 44/48 call spread for .86, 5000x, this breaks even on Feb expiration at 44.86 with max gain of 3.14 at 48 or higher.