Too Many Options: $EBAY, $WAG, $CAT, $KRFT, $CLX, $GE

by Enis June 10, 2014 7:51 am • Commentary

Interesting change in the options market yesterday, as the major indices closed higher, but implied volatility also generally closed higher as well, in contrast to the vol bleed that we have seen over the past few weeks.  Of course, that’s after 30 day implied volatility near a decade low.  Call options much more active among single stocks.

1.  EBAY – Stock trying to hold above the 1 year low near $48, and reversed higher yesterday, though closed below $50.  Trader rolled down 20k of the July 52.5 calls to the July 49 calls, paying around $1.13 for the July 49/52.5 call spread.  EBAY reports earnings before July expiry, currently indicated for July 16th.  The stock last traded below $48 in November 2012.

2.  WAG – Also a roll in WAG, though this one was locking in profits.  Trader sold 11,000 of the Jan15 70 calls at 8.225 to close, and bought 16,000 of the Jan15 75 calls for 5.60 to open.  WAG reports earnings in two weeks.  30 day implied volatility is near its highest level of the past year ahead of the event.

3.  CAT – Stock hit a 2 year high on Monday.  Buyer of 10k of the Nov 80 puts for 0.42 in the morning, looks like to close.  CAT has risen 20% so far in 2014, one of the best performing large cap stocks in the market.

4.  KRFT – New all-time high for KRFT, which has only been public since October 2012. The Jul19th 62.5 calls traded over 20k at an average price of $0.38, mostly in the last hour of the day, buyers getting very aggressive as the options traded from 0.25 up to 0.50 in the last hour.  $59 is the important supper spot for KRFT.

5.  CLX – CLX rose 3.5% on Monday on the highest volume day in the past year for the stock.  The stock started ramping higher shortly before 1 pm, with a buyer of 3k of the Jul19th 95 calls for 0.20 sparking the move.  That line traded over 15k by the end of the day, at an average price of 0.74 on the day.  Some speculated that the initial call buyer was anticipating a potential deal announcement in the next month.  CLX’s all-time high is $96.76 from December 2013.

6.  GE – GE continued its move above $27 resistance on Monday.  The Jul19th 28 calls that Dan discussed on the site on Friday afternoon and on Options Action ended up trading over 20k on the day at an average price of $0.23.  GE’s 5 year high is $28.09 from Dec 31, 2013.