Too Many Options: VIX, EEM, JCP, DG, GE, MS

by Enis May 19, 2014 5:45 am • Commentary

Friday expiration was relatively quiet with the indices closing higher after a move up in the afternoon.  The 1860 level in SPX cash is the spot to watch this week on the downside – that would be a clean break of the 50 day moving average and is the low in May so far.  On the upside, the unfilled gap from Wednesday is 1888.53.

1.  VIX – VIX spot closed near a 1 year low once again, though above the 12 level that has held.  VIX spot has not closed above 14 in May so far.  Buyer of 50k of the Sept 21/30 call spread for 0.70 in the afternoon.  We put on our own VIX structure last week.

2.  EEM – Large roll in EEM puts – a trader sold 80k of the Sept 30 puts at .07 to close, and bought 103k of the Dec 31 puts for .31 to open.  EEM approached its 1 year high, which is around $44 from May of last year.

3.  JCP – Stock closed cleanly above its 200 day moving average for the first time since May 2012, though was nob able to breach $10 resistance on the upside.  However, puts were still more active than calls.  The Jan15 5 puts traded 30k at 0.235 in the morning, followed by a seller of 14,950 of the Jan16 5 puts at 0.91.  JCP 5 year CDS (measure of credit) closed below 1000 for the first time since September as JCP bonds rallied strongly on the positive earnings result.

4.  DG – Seller of 35k of the Aug 57.5 calls at 1.55.  DG reports earnings in early June.  The stock has traded below its 200 day moving average for much of the past 2 months, and is trying to hold its breakout area of $54-$56 (near the summer 2012 high).

5.  GE – Buyer of 27k of the June 27 calls for 0.26 near noon.  GE has not traded above $27 since mid-Jan, but persistent buying of the June 27 line over the last week.  Open interest has risen to above 100k.

6.  MS – The Jan15 27 puts traded 25k at 1.30 in the morning.  MS has generally held above its 200 day moving average for most of the past month, with a 6 month low near $28.  However, the stock is still down 4% on the year.