Too Many Options: $EEM, $F, $GLW, $GRPN, $HYG, $MSFT

by Dan February 20, 2014 4:51 pm • Commentary

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

1. EEM – volumes continue to run hot, with today’s volume almost 1.5x avg daily volume, but what stuck out was puts out numbering calls 600k to 95k as one trader made a large bearish bet paying 1.00 for 162k of the June 32.50/37.50 put spread when the stock was $38.80, placing the break-even at 36.50 or down about 6% with gains of 4.00 capped at 32.50.

2. MSFT – the stock is approaching the highs of the year and important technical resistance level at $38. In the last hour of the day a trader made a bullish bet in the form of an in the money July call butterfly, paying 2.53 for 10k by 20k by 10k of the July 34/40/46 call fly vs selling 190k shares of stock at 37.75.   The trader could have been replacing stock with the bullish structure.  This fly breaks even at 36.53 with profits of up to 3.47 up until 43.37 with max profit of 3.47 at 40.   Maximum loss of 2.53 below 34 and above 46.

3. WMT – closed down 1.8% on the day, but up 1% from the morning lows after reporting disappointing Q4 results.  About an hour after the open when the stock was 73.62 a trader bought 10k of the April 77.50 calls paying up to .34, this could have been a long holder covering an overwrite as they were marked closing.

4. HYG – the etf that tracks the iShares High Yield index saw the second straight day of call buying as the etf is breaking out of a 7 month consolidation.  There was an outright buyer of 20k April 94 calls paying .425 to open.

5. GLW – filled in the entire earnings gap and is now trading at levels where we sold our long from the investment portfolio last month prior to earnings. One trader today was looking down, paid .96 to buy 10k May 19 puts to open.  15k of the puts ended up trading on the day.

6. F – massive, and slightly complicated bullish trade went up in Ford when the stock was $15.26.  A Trader bought the June 16/18 1x 1.5 ratio call spread 30k by 45k and also bought the Sept 16 / 18 1x 1.15 ratio call spread 30,000 by 45,000 paying .36 for the whole package.  This trade could be a levering up a long position and leaning on massive technical resistance at 18, a level it was not able to break out above last year.  The max profit of this trade is at 18 where the trader can make 2, but the payout starts to trail off above 18.  Options volume in Ford today ran 2x avg daily volume.

7. GRPN – the stock saw heavy call volume prior to tonight’s earnings report as calls outnumbered puts by a ratio of 2.7 to 1 as total options volume was 6x average daily volume.  The largest block was an opening buy of 20k Feb (tomorrow expiration) 12 calls for .15