Too Many Options: SPY, TLT, VIX

by Dan May 29, 2014 4:29 pm • Commentary

Fairly interesting divergence between equities and bonds for the first time in a while as the SPX closed on a new all time high and bonds as measured by the TLT made a new 11 month high, only to reverse and close on the low of the day.  See our trade on TLT from yesterday:

Here was a some of the large untied options activity that caught our eye today:

1. TLT – options volume ran very hot at more than 3x average daily volume.  While puts narrowly outnumbered calls at 87,000 to 76,000, most of today’s flow was bearish.  The most heavily traded options in the name today was 40k of the July 113 calls, all being sold with the largest block of 18k being sold at 2.50 when the etf was 114.80 this morning, likely a bond bull closing out of a bullish bet.  Shortly before noon a buyer emerged of the July 113/110 put spread, paying .78 for 22k when the etf was 115.07.

2. SPY – options volume ran slightly lower than the average over the last month, but puts outnumbered calls 2 to 1 at 1.2 million to 600k, with the largest trade a roll up of 95k July 181 puts from the July 180 puts playing about .10 for the privilege, making one option broker VERY Happy!

3. CLF – saw a roll down in puts, trader sold 7,000 Oct 17 puts at 3.00 to close and bought 19,000 Jan 12 puts for 1.10 to open when the stock was 15.75

4. PBF – saw some bullish activity with a buyer paying 1.80 for 10,000 of the Jan 35/45 call spreads to open when stock was 31.22

5. XOP –  continues to see bearish flow, with total volume 2x average daily volume, almost all puts.  A trader bought 10,000 of the July 74/67 put spread for .95, a day after a buyer paid 1.30 for 20,000 July 73/66 put spreads yesterday.

6. VIX – activity has slowed down a bit in the fear index as it sits at mutli-year lows.  The most active options were 74,000 of the Sept 26 calls, 40,000 of the June 15 calls and 33,000 of the June 16 calls, most looking to be bought