Too Many Options: $AAPL, $ANGI, $BX, $GLD, $XLF

by Dan February 10, 2014 5:06 pm • Commentary

Here is a list of the some of the most interesting untied options activity from today:

1.  AAPL – the stock’s reaction to the news that activist investor Carl Icahn was dropping his proposal for the company to buy back at least $50 billion worth of stock caught some off guard, with the stock rallying 1.79% and dramatically outperforming the broad market.

While total options volume ran was about 20% below the one month average, short dated calls were the most active, with the top 4 lines falling in next week Feb 14th expiration, many of them being bought.

Today’s Most Active:

-21,000 of the Feb 14th 530 calls

-14,400 of the Feb 14th 540 calls

-11,900 of the Feb 14th 535 calls

-10,750 of the Feb 14th 525 calls

2. GLD – gold broke out to a new 2 and a half month high today and the largest blocks in the etf were buyers of out of the money calls in March, where a buyer paid .96 for 15,000 March 127 calls, with break-even up about 4% from current levels.

3. IGT – saw heavy options activity, running at more than 4x the average daily volume over the last month with nearly all coming in the form of put sales in one line.  Starting shortly before noon and ending around 2pm there was a seller of almost 66,000 March 14 puts at between .45 and .40, all to open as there was 1300 of open interest in the line coming into the day.

4. BX – One of the reasons we are very apprehensive to trade on the back of unusual options activity is because unless you have a real clue as to what the initiator is doing , and possibly what against, a lot of the activity we see every day makes little sense.  For instance there was an opening seller today of the BX March 29 puts at .43 when the stock was about 31.60.  Now if the stock is above 29 on March expiration the trader collects .43, or about 1.3% of the underlying stock price.  If that is a bullish bet on the stock, I just don’t see the potential reward worth the risk, but thats just me,  If I were short the stock and wanted to put a limit order as to where I would cover the stock then maybe selling a put would make more sense, adding yield to my short, but still, why take away potential upside in the event of a massive share decline.

5. DHI – options volume ran 3x average daily volume with the largest block being a buyer of 15,000 Aug 24 calls for 2.30 when the stock was 23.43, placing a break-even of up 12% on Aug expiration.

6. ANGI – not a name that we see a ton of options flow in but thought worth mentioning as the company is scheduled to report q4 results Wednesday after the close.  There was a buyer of 4600 of the Feb 20/22.50 call spreads paying .40 to open when the stock was 17.17, making the break-even on Feb expiration of 20.40 up almost 19% with a max gain of 2.10 if the stock is above 22.50 on Feb expiration.

7. XLF – there was a closing buyer of 20k Apr 20 puts for .24, there is 300k of open interest in the line.

8. CSCO – reports fiscal Q2 results Wednesday after the close, the options market is implying about a 6% move which is shy of the 4 qtr avg move of about 7.9%