Too Many Options: $EEM, $FXI, $GM, $PFE, $VALE

by Dan March 11, 2014 4:42 pm • Commentary

Here is a list of the some of the large options flow that caught our eye in an otherwise quiet day on a volume basis:

1. GM – had one of its worst days in over a year, down 5.15%, and closing just above the one month lows.  Options volumes ran just a bit over 2x average daily volumes with calls outnumbering puts a little more than 2 to 1.  The most active strikes were the March 37 calls, with 23,000 trading, many of them looking like they were bought to close, possibly closing an overwrite.

2. PFE – large roll where a trader bought 14,000 March 31 calls for 1.38 to close, bought 3500 March 30 calls for 2.35 to close and sold 17,600 June 32 calls at 1.36 to open and bought 16,000 June 28 puts for .27 to open.   This looks like the trader was closing a March overwrite and bought a June collar when the stock was 32.27.

3. VALE – stock closed about 1% from the 52 week low made about a year ago and options volumes ran a little more than 2x the average daily volume.  The most active strikes appeared to be traders closing upside calls with the biggest block a sale of 14,000 June 14 calls at .34 to close, 22,000 ended up trading in the strike on the day, followed by 12,800 of the Sept 18 calls with many being sold to close for less than 15 cents.

4, FXI – continues to see bearish options flow with total volume trading 1.6x average daily volume.  The single largest block of etfs was in FXI, with 30,700 of the March 28th weekly puts being bought for .38 when the etf was trading at 34.04, followed a bit later by a buy of 9,000 of the same strike for .38 to open, a total of 45,000 traded on the day.

5. EEM – contrary to the flow in FXI, there was put buying in EEM, but this looked to be closing and much of it tied to stock.  There was a buyer of 22,500 March 39.5 puts for .68 vs buying stock at 39.30 on a 54 delta, this was closing as there is 165,000 open interest in the strike.   The largest block on the day was a buy of 30,000 March 38.50 puts for .53 to close , this was also tied to stock, with almost 42,000 trading on the day, nearly getting close to the entire open interest in the strike of about 47,000.  Traders could see implied vol going up in the near term and looking to close positions that could be adversely affected with less than 2 weeks to expiration.