Too Many Options: $XLF, $BAC, $MS, $F, $DG

by Enis March 21, 2014 7:27 am • Commentary

Financials dominated options volumes as traders were optimistic ahead of the release of the first round of the stress tests after the close.

1.  XLF – XLF hit a new bull market high yesterday on elevated volume (see yesterday’s CotD for more detail).  Calls were very active.  The April 23 calls traded over 70k at an average price of 0.14, mostly buyer initiated.  The December 25 calls traded 42k for 0.34, and the Dec 27  calls traded 63k for 0.08.  XLF last traded above $25 in May 2008.

2.  BAC – BAC hit its highest level since the spring of 2010.  The obvious spot to watch on the upside is the $20 high from April 2010.  The weekly 18 calls traded over 100k, while the Apr19th 17 and Apr19th 18 calls both traded over 35k on the day.  The Jan15 17 calls also traded over 20k.  BAC reports earnings on April 16th.

3.  MS – The Apr19th 33 / 34 call spread traded for $0.34 in the afternoon, buyer initiated.  MS peaked on January 17th at $33.52.  Its bull market high is actually from October 2009, which was near $36.

4.  F – The June 16/18 1 x 1.5 call spread traded 30k x 45k in the afternoon.  The June 16 calls traded 30k for 0.46, while the June 18 calls traded 45k for 0.10.  The stock’s high in 2013 was right around $18.  The high in January 2011 was $18.97.  The main resistance on the upside is at the $16 level.

5.  DG – Buyer of 35k of the August 60 calls for 3.30 near noon.  Breakeven on that trade is $63.30, which is slightly above the stock’s all-time high near $63, set in January 2014.