Too Many Options: $EEM, $EFA, $GM, $JCP, $TGT, $XLF

by Dan December 4, 2013 4:09 pm • Commentary

1. GM – stock was up almost 4% today just before noon on news that Kyle Bass, the hedge fund manager who runs Hayman Capital took a stake in the stock and sees “at least 40% increase  in the shares over the  next 12-18 months“.  Despite giving up much of the gains, the stock did close up 1.5% on the day and saw some fairly brisk options activity.  The largest trade in the name on the day was a buyer of 15,000 March 39/44 Call Spreads paying 1.69 to open tied to stock at 38.55 on a 26 delta, meaning the trader sold 390k shares at 38.55.  Often times traders will trade the options delta neutral to get a better price on the options and then trade out of the stock.  There was also a bullish role where a trader sold 10k Dec 38 calls to close at 1.60 and bought 8700 March 41 calls for 1.84 to open.

2. XLF – Looked to be a large buyer of the Dec 13th (next Friday) 21.50 calls, paying .09 for 80k, more than 93k traded on the day.  There was also a lot of volume in the Dec 27th expiration 21 calls, with more than 84k trading.

3. EEM – Massive roll in Dec/ Jan Puts, a trader sells 250k Dec 41.5 Puts to close at 1.25 & Buys 250k Jan 41 Puts for 1.43 to open.  Yesterday there was a seller of 180k Dec 40 puts btwn .53 and .55.

4. JCP – there was a couple interesting Bullish trades in the stock today as it retreated from the psychologically important $10 level.  A trader bought the Jan 2015 13/20/27 Call Butterfly, paying .90 for 2800 by 5600 by 2800.  This trade breaks even at 13.90 on Jan 15 expiration with the max gain of 6.10 at 20 and makes up to 6.10 btwn 20 and 26.10.  Max loss of .90 below 13 and above 27. Also there was a Seller of 15k Dec 10 puts at  .68 to open when the stock was 9.77.  This is a bullish trade with the seller standing to gain if the stock is above 9.32 on Dec expiration.

5. TGT – Yesterday we posted on TGT vs WMT and identified a pair that we like, Long TGT, Short WMT (here).  Today when TGT stock was 63.36, a trader bought short dated in the money calls playing for a bounce btwn now and Dec expiration.  The trader bought 7500 Dec 62.50 calls to open paying 1.60.  The stock bounced for the second time since early Oct off of the $62 technical support level.

6. EFA– on the bell there was a decent roll in Dec/Jan calls where a trader sold 56,000 Dec 67 calls to close at .06 and bought 35,000 Jan 55 calls for .57 to open.