Too Many Options: $AA, $AAPL, $BAC, $JCP, $SHLD, $XLF

by Dan November 27, 2013 5:20 pm • Commentary

Daily Options volume continued to be light heading into Thanksgiving tomorrow and half day of trading on Friday.  Total options volume trailed the recent average by almost 20%.  Despite quiet trading, these were the large blocks and interesting volume that caught our eye:

1. AA – Shortly after the open a trader bought 30k June 11 calls for .49 to open.  The stock has not traded above $10 since April 2012, and this trade breaks-even up 17% on June expiration.  The 5 yr chart below shows the massive technical resistance level at $10.

AA 5yr chart from Bloomberg
AA 5yr chart from Bloomberg

2. AAPL – as the stock is on a tear this week, up 5% in the first 3 trading days, quickly approaching the highs for 2013 at $555 made in the first week of the year.  Nov 29th (Friday expiration options) were 4 of the top 5 most actively traded options among single stock names, with 49,700 of the Nov29th 545 calls, 35,700 of the Nov29th 540 calls, 35,500 of the Nov29th 550 calls, and 34,500 Nov29th 540 puts trading.

3. BAC – Looked like a closing buyer of 50,000 Dec 14 Puts, paying btwn .03 and .o4.  There was also a closing seller of 20,000 Dec 15 Puts at .09.  BAC was a noticeable under-performer among bank stocks today

4. XLF – this week has seen some massive call buying in the financial sector etf as a trader bought 161k Dec 22 calls yesterday for .13, but today one trader look to make a bearish bet through Jan expiration with in the money puts buying 42,000 Jan 22 Puts for .82 to open, 50k traded on the day.

5. JCP – The stock closed above $10 for the first time since late September capping a 60% rally off of the recent 10 year lows.  Today one trader was either looking for a re-test of the previous lows after the holiday season or looking to protect a long position with the purchase of 20,000 Feb 9 Puts for 1.00.

6. SHLD – with the stock up 60% form the August lows and up 54% on the year, one trader is betting on considerably more upside for the stock by June expiration, buying 20k of the June 80.42 / 90.42 Call Spread paying 1.60. Break-even on the call spread is at 82.02 up almost 29% from current levels.