Too Many Options: $BBY, $EEM, $FB, $XLF, $VIX, $VLO

by Dan January 7, 2014 4:05 pm • Commentary

1. FB – the stock came a few cents away from a new intra-day all time high today.  There was a very large roll up in calls where a trader sold 60,000 Feb 55 calls at 5.87 to close and bought 60,000 Feb 57.5 calls for 4.65 to open. Feb expiration will catch their confirmed January 29th Q4 earnings event.  The options market is already implying a one day 10% move which is basically inline with the 9.6% avg move over the last 4 qtrs.

2. VLO – the stock broke out to a new 6 year high today and it appears that options trader are positioning for more upside.  There was a buyer of 10,000 March 55 calls paying 1.45, while 18,000 Feb 55 calls were bought for .90 to open.

3. BBY – traded almost 4x average day volume in options today, with a trader selling 10,000 Jan 10th weekly 40 calls at .28 to close when the stock was 39.34, obviously exiting a bullish bet with Friday’s weekly expiration quickly upon us.

4. EEM – for the better part of early 2014 trading there have been nothing but sellers in emerging market equities, highlighted by the EEM approximate 4.5% decline year to date.  Right out of the gate this morning there was a buyer of short dated calls, a trader likely making a near the money low premium play for a back to near term technical resistance, with break-evens above the etf’s 200 day moving average.  Shortly after the open a trader bought 35,000 Feb 41 calls for 64 cents.

 5. XLF – Jan calls continue to be active for the second straight day as more than 50,000 of the Jan 22 calls traded hands with more than 265,000 options trading on the day, overwhelmingly skewed towards calls, 210,000 to 55,000 puts.  This comes on the first day of under-performance for the bank etf of 2014, also on a day that saw European Banks massively OUT-perform with the SX7E (EuroStoxx Bank Index) up more than 4%.  Traders were also looking to Jan weeklies, specially the Jan 31st expiration (that should capture most large component’s q4 earnings) as 40,000 Jan31st 22.50 calls traded today.  Also one trader took a longer term bullish view buying 23,000 June 23 calls for .45 to open.  We are long the Jan reg 22 calls (read here and here).

 6. VIX – the fear index made fresh lows on the year, spending most of the day below 13.  Traders continue to see out of the  money calls spreads as premium cheap hedges, one trader bought 40,000 March 18/23 call spreads paying .475 in two lots of