Too Many Options: $BAC, $GT, $MSFT, $MU, $SIRI, $UAL, $YHOO

by Dan January 8, 2014 4:49 pm • Commentary

1. YHOO –  Right out of the gate this morning a trader bought 2500 March 37 puts for .85, something we have not seen a whole heck of a lot of during the stock’s recent ascent.  Later in the afternoon though there was a massive roll in calls where a trader sold 70k Jan 35 calls at 6.45 to close and bought 100k Jan 40 calls for 1.75 to open.  Jan regular expiration does not catch Q4 earnings as they are already confirmed for Jan 28th after the close.  The options market is already implying a one day move of about 6%, which is very rich to its 4 qtr avg move of about 1.5%.

2. UAL – made a new 52 week high today up more than 5%.  A trader rolled up some calls in March, sold 10k march 40 calls at 3.45 to close and bought 10k march 43 calls to open for 2.12

3. SIRI – a trader bought 50,000 Feb / June $4 call spread paying .12 (selling Feb and buying June), if the stock is below 4 on Feb expiration than the trader owns the longer dated June 4 calls for only 12 cents.  I suspect they are playing for a higher bid from Liberty Media.

4. MSFT – on a day that saw considerable weakness relative to its large cap tech peers, down 2% on news that Ford CEO Alan Mulally pulled out of the running to replace MSFT CEO Steve Ballmer, there was a good bit of call buying.   Calls outnumbered by puts by a factor of 2 to 1, with the largest blocks a buy of 18,000 Feb 38 calls for .44 to open and a buy of 12k Feb 7th weekly 37.5 calls for .45.

5. GT – is up 100% from the April 2013 lows,a trader just bought 7,000 Apr14 24 calls for 2.00, they look closing, there is 8400 open interest in the strike, so maybe was an over-writer closing

6. BAC – after taking a brief pause on its healthy ytd rally, the stock was back in rally mode and traders were back buying up calls.  Calls outnumbered puts today almost 3 to 1, with one trader aggressively buying the Jan 17 calls, sweeping multiple exchanges paying .14 for 24k, more than 57k traded on the day.  BAC reports Q4 results next week on Jan 15th before the open.   The options market is implying about a 2.5% one day move which is essentially inline with the 4 qtr avg move.

7. MU – stock had a monster day, up almost 10%, making new 10 year highs.  As one would expect, calls outnumbered puts at more than 4 to 1.  One trader sees further upside, rolling an April call spread, selling 5k Apr 20/26 call spreads to close, and buying 5k of the April 25/29 call spreads to open.  Another trader sold 5k Feb 22 calls at 2.41 to close and bought 3500 July 26 calls.