Too Many Options: $IWM, $XLF, $SUNE, $ZNGA, $RAI, $WMB

by Enis March 5, 2014 7:46 am • Commentary

Options volumes were subdued considering the active volumes in the stock market yesterday.  A few standouts:

1.  IWM – Largest volume day in IWM in more than a year.  The Russell 2000 set a new all-time high, and it was the largest daily advance since the first day of 2013.  Option volumes were about 1.6x average, with the Mar22nd 120, Mar22nd 115, and the Apr19th 112 puts all trading over 30k.

2.  XLF – Financials one of the few sectors that is still below its high of 2013, which was set in mid-January.  Buyer of 90k of the Mar7th 22 calls for 0.114 average price just before the close yesterday.  Earlier in the session, 45k of the Jan15 18 puts traded for 0.42.

3.  SUNE – Stock nearly made a new 5 year high (which is from 2009, at 21.36), with the intraday high yesterday at 21.33.  SUNE is already up 60% year-to-date, and call options have been very active for the past week.  Yesterday saw the third large massive roll in SUNE calls in the last week.  The trader sold to close 40,000 of the April 20 calls at 2.10, and bought to open 50,000 april 22 calls for 1.35.

4.  ZNGA – Stock hit a new 18 month high on yesterday’s gap higher after the CEO commented that mobile gaming was the company’s focus going forward.  Options volumes were over 3x the average 1 month daily volume.  The Mar22nd 5 calls were the most active line, trading nearly 50k on the day at an average price of 0.70.  The May 6 calls were also quite active, trading over 30k at an average price of 0.46.  ZNGA reports earnings in late April.

5.  RAI – RAI has risen 10% so far this week on big volume on speculation that RAI might bid for Lorillard.  Both RAI and LO hit a new all-time high this week.  10 minutes before the close, there was a buyer of 25k of the May 60/65 call spread for 0.90 to open.

6.  WMB – Buyer of 20k of the Jan16 50/60 call spread for 1.40 to open.  Stock made a new all-time high yesterday, and has held above the $40 breakout level since early February.