Too Many Options: $EEM, $EBAY, $FDO $INTC, $IWM, $SPY, $RAX

by Dan January 14, 2014 4:02 pm • Commentary

1. EEM – huge roll in puts, out and down.  A trader sold 242,000 Jan 41 Puts to close at .92 & bought 242,000 Feb 40 Puts for 1.00 to open.  This is a very similar size that we have seen for months prior to expiration where the trader rolls what appears to be near the money portfolio protection out a month and down to the put strike nearest the money.

2. EBAY – looks like a bullish trader rolled calls out a month to catch next week’s Q4 earnings report expected Jan 22nd after the close.  The trader sold 32,000 Jan 52 calls at 2.08 to close and bought 32,000 Feb 52.50 calls for 2.28 to open.  The options market is implying a one day move of about 5%, which is basically in line with the 4 qtr avg of about 4.75%.  I will mention that the last 3 qtrs the stock has sold off on avg of about 5.5% following results.

3. FDO – This was probably the most interesting trade of the day, there was a buyer of the Jan 2015 62.50 / 55 1×2 Put Spread paying .175 for 25,000 by 50,000.  Between 62.32 and 55 the trader can make up to 7.32, the payout trails off between 55 and 47.68 and losses below that.  Speaking to one trader at a large institutional who trades the retail space, he suspects that this trade was initiated by someone who is short the stock looking to add leverage to it, and or who would be willing to be taken out of the short stock position down at the worst case scenario of the options trade, 47.68.

4. INTC – stock traded up 4% on the day to new 52 week highs after an upgrade from JPM.  A trader rolled out a bullish bet in Jan to Feb and sold 40,000 Jan 26 calls to close at .55 and bought 40,000 Feb 26 calls for .75, paid .20 for the privlege.  INTC reports Q4 earnings on Thursday after the close,  the options market is implying a one-day move of 3.3%, in line with the average one-day move over the last four quarters.  Calls outnumbered puts at more than 300,000 to 150,000 on 4x average daily volume.

5. IWM – when the etf was about $115 shortly after the open a trader rolled a bullish bet in Jan to Feb by selling 46,000 Jan 112 calls that were firmly in the money at 3.04 to close and bought 69,000 Feb 115 calls for 2.24 to open.

6. SPY – with most U.S. equity indices getting back most of yesterday’s losses traders “got back in the pool” so to speak by taking a page out of the 2013 playbook and bought the dip.  Shortly after 2pm there were two trades in June calls that caught my eye, a buy of 19,000 June 188 calls paying 3.68 to open and a buy of 13,000 June 189 calls paying 3.28 to open.

7. RAX – A trader rolled a large put position and bought upside calls into February’s earnings cycle, selling 7000 Jan 30 puts at .07 and buying 7000 Feb 30 puts for .55.  They then bought 6500 Feb 42 calls for .90. RAX is set to report earnings on or about February 12th.