1. EBAY – the stock had its worst day in a month, quickly touching a very important technical support level at $50, a number it has bounced off of on 5 occasions this year. About an hour and 15 minutes after the open, with the stock a noticeable under-performer, a trader bought 20,000 Jan 52.50 calls for 1.80 and sold 860,000 shares, possibly replacing long stock with options, but unclear whether the trade was opening or closing as there is 21,900 of open interest in the strike.
2. CSCO – Looked to be some once bullish players calling uncle. A trader sold 40k of the Jan 24 calls to close at .045 there is over 130,000 open in this strike, I would expect to see more of the same in the days to come as traders look to get whatever they can for calls that had been at the money just a week ago.
3. ARO – It really sucks to be a teen retailer these days, there appears to be few places to hide. Today a trader bought 10,000 ARO April 6 Puts for .225 to open. The 52 week low is $7.76 and the stock has not traded below $6 in ten years.
4. DE – company issued an unexpected fiscal Q4 earnings beat and the stock broke 7 consecutive declines on quarterly earnings days with the stock closing up more than 2%. Less than an hour after the open a trader sold 14,000 Dec 80 puts to close at .25, could have been protection against a long position. A total of 24,000 traded on the day vs open interest of about 34,000.
5. LOW – stock had its worst day in a year, down 6.1%, after just last week making new all time highs. The company’s Q3 disappointment came as a bit of a surprise after competitor HD just yesterday reported a beat and raise for their Q3. On the bell a trader bought 30,000 Dec 44 Puts for .25 (and bought 450,000 shares for 47.35) they looked to close, as the trade was equal to nearly the entire open interest in the strike.
6. JCP – despite what still amounts to fairly bad results, JCP’s management suggesting that they “have turned the corner” caused shorts to cover and the stock to gain 8.3%, capping a 50% run in the last month off of 2o year lows. One trader beleives the stock won’t be below 8 on March expiration as he sold 7,000 March 8 puts at 1.00 and bought 7,000 March 11 calls for 1.18, the Risk Reversal cost .18 and creates a band where he gets long at 8.18 on the downside or 11.18 on the upside on March expiration. There was also an opening buyer of 5,000 May 9 calls for 2.09.