Too Many Options: $BA, $EA, $MET, $TTWO, $XOM, $YHOO, $ZNGA

by Dan February 4, 2014 9:39 pm • Commentary

Despite the overnight weakness in Asia, our equity markets found their footing right out of the gates after yesterday’s 2% drubbing. Below is a list of some untied single stock options trades that caught our attention from today’s session:

1.  TTWO  –  Stock was down almost 13% at one point at its lows in the morning a disappointing forward outlook last night.  Despite the stock giving back much of the last few weeks gains, there was a very bullish trade in the options market where a trader bought 25,000 Sept 13/22 Risk Reversals (selling put and buying call) for .20 to open.  This trade breaks even on Sept expiration at 22.20 on the upside, up almost 29%, between 22 and 13 the buyer loses the .20 premium paid for the structure, and below 13 is put the stock and suffers losses on top of the premium paid.

2. EA – sticking with the gaming sector, EA has been a fantastic performer ytd, up 15%, and up 22% since mid January when the stock saw some upgrades on enthusiasm about soon to be released new game titles.  Today it appeared that a trader took profits on a bullish call spread by selling 10,000 of the June 26/30 call spreads at 1.52 to close.

3. ZNGA – traded at new 52 week highs today on the heals of an upgrade to a Buy from UBS with a 12 month price target of $6.  Calls out number puts a more than 4 to 1, with more than 15,000 March 5 calls changing hands, followed by more than 8,000 Feb 5 calls, many being bought.   A trader took profits in a bullish risk reversal selling to close 50,000 June 4.5/3 Risk Reversals, in this case the trader sold 50,000 June 4.5 calls at .74 to close and bought back 50,000 June 3 puts for .06 to close.

4. XOM – saw a roll down in calls where a trader bought 12,000 July 97.50 calls for 1.26 to open and sold    24,000 July 105 calls at .28 to close.  See our comments on XOM here from our Adult Swim Trade today.

5. YHOO – saw a roll down in calls after the stocks recent decline from above $40 prior to their Q4 results. A trader sold to close 11,000 March 37 calls at 1.06, and bought 11,000 March 35 calls for 1.88 to open.

6. MET – with the stock down 13% from the last month’s highs, a trader rolled down and out some calls in front of the company’s scheduled Q4 results on Feb 12th.  A trader sold 10k March 55 calls at .17 to close and bought 5,000 April 50 calls for 1.50 to open.

7. BA – since making new all time highs on Jan 22nd, the stock has sold off 15% in what feels like a straight line.  A trader this morning either closed a hedge or an outright bearish bet by selling to close 7,000 of the Aug 130/115 put spread at 7.65.

8. LVLT – stock crossed the 50 day moving average for the first time since July.  Looks like a trader bought a little over 3000 Feb 27/30 put spreads and sold the Feb 35 call for $.70.  Probably purchasing some protection against long stock into earnings before the open tomorrow.

9. EL – with earnings tomorrow before the open there was a buyer of the Feb 72.5/75 1×2 call spread 1000 times and later a trader bought the march 70/75 1×2 call spread and sold the Mar 65 puts 825 times.  75 to the upside and 65 to the downside provide resistance points in this stock.

10. RL – stock has fallen below its moving averages and any resistance from the past year.  Yet, with earnings tomorrow before the open some buyers may be feeling optimistic as it looks  a couple thousand of the Feb 160/170 call spreads were purchased in the morning.  IV30 at 40 is the highest since Oct 2012.