Too Many Options: $AA, $S, $FDO, $BMY, $FTNT, $ADM, $HLF

by Enis January 13, 2014 6:54 am • Commentary

The S&P 500 index traded in a tight 20 point range all of last week.  Single stock options activity on Friday included some rarely traded stocks.

1.  AA – Alcoa stock declined 5.5% on Friday after a disappointing earnings report.  However, the stock held $10 support, and expectations were high after AA rallied 40% in the months leading up to the report.The Jan18th 10 calls and the July 11 calls traded over 30k, likely a trader selling Jan calls to close and rolling to July.

2.  S – Sprint has been very volatile over the past 6 months.  The stock more than doubled in that period, but has declined almost 20% in the past 2 weeks alone.  The May 8/May 6 risk reversal traded 41k times for 1.83.

3.  FDO – Stock acted very well the past 2 days (on big volume) despite a weak earnings number on Thursday morning.  Some chatter among traders of possible activist involvement on the big buying over the last 2 days.  Buyer of 10k of the Apr 70/75 call spread for 1.01 in the morning.  In the afternoon, the Apr 57.5/Apr 75 risk reversal traded for $0.50 debit (selling put, buying call).  FDO’s all-time high is $75.29 reached on Sept 20th, 2013.

4.  BMY – Bristol-Myers continued its hot start to 2014, up another 2% on Friday and now up 6% to start the year.  Seller of around 20k of the Jan14th 52.5 calls in the morning at an average price of 3.35, and a buyer of around 30k of the Feb 57.5 calls for 1.50 average price, looks like same trader rolling up and out.

5.  FTNT – Fortinet is a $3 billion market cap network security company.  Big buyer of 20k of the Jan18th 20 calls for 0.45 early in the morning.  Almost a $1 million bet for a weekly option, possibly related to the recent retailer hack attacks.  Interestingly, the stock has been raised to overweight at Morgan Stanley this morning.

6.  ADM – The Mar 42 calls traded 23k times for 2.26 in the afternoon.  ADM hit its highest level since 2008 in December, and reports earnings in early February.

7.  HLF – Same line as Thursday, the Jan15 50 puts, trades 20k times (traded 25k on Thursday) at 7.10.  HLF reports earnings in mid-December, and traded at a new all-time high on Friday.