Too Many Options: $EWJ, $GLD, $COP, $S, $EPI, $UAL

by Enis June 3, 2014 6:49 am • Commentary

Stock market volumes were anemic once again, even with the debacle surrounding the ISM release, which had to be revised midday after a faulty release at the scheduled 10:00 am release time.  Options volumes were also low, dominated by calls, as the CBOE put/call ratio closed at 0.69.

1.  EWJ – Trader rolled 250k of the June 11 calls out to the July 11 calls, paying 0.04 to buy July and sell June.  The trader initially bought the June 11 calls in April for prices ranging from 0.36 to 0.43.  The Nikkei is still red on the year, but closed above 15,000 today for the first time since early April.

2.  GLD – Gold hit its lowest level since January yesterday, though the commodity is still up 2% so far in 2014 (after closing 2013 near a multiyear low).  Buyer of over 30k of the Aug 128 calls for 0.65 to open throughout the day.  $114.46 is the level to watch on the downside, as it is the 3 year low touched on December 31st.  $125 is first resistance on the upside.

3.  COP – Buyer of 15,500 of the July 85 calls for 0.22 in the morning.  COP hit a new all-time high in May, and is now up 12.5% year-to-date.  COP’s next earnings report will be after July expiry, so the buyer of the July 85 calls is making an out-of-the-money bet with no clear catalyst (currently known by the market at least).

4.  S – Sprint continued its recent rally, closing at its highest level since January.  Trader rolled 20k of the June 9 calls out to the July 9 calls, paying 0.19 for the privilege.  Sprint’s majority owner, Softbank, continues to advocate for a merger with T-Mobile (TMUS).

5.  EPI – EPI is an Indian equity market ETF from Wisdomtree.  Buyer of over 15k of the Jun27th 22.5 calls for 0.35 in the morning.  EPI has rallied 35% over the past 4 months, and is now at its highest level since mid-2011 after the positive reaction to the recent elections.

6.  UAL – Buyer of 16k of July 46 calls for 2.61 midday.  Airlines continue to soar in 2014, and UAL is now up 23.5% year-to-date after Monday’s 5% move higher.  The next earnings date is scheduled for late July.