Too Many Options: FB, AMD, CBS, BEAV, QEP, ARCP

by Enis June 11, 2014 6:33 am • Commentary

Overall market volumes continued to be very low, accompanied by low intraday and close to close volatility over the past week.  10 day realized volatility in the S&P 500 index is down to 3.9, near the lows of the past 5 years.

1.  FB – Call volumes were 2.5x the 1 month average, as Facebook traded above $65 for the first time since late March.  The Jul19th 65 calls and the Jul19th 62.5 calls traded over 40k on the session, as one trader rolled up the calls 30k times.  30 day implied volatility moved about a point higher, though from the low-30’s, the lowest level since last summer.  FB reports earnings in late July.  The all-time high is $72.59, while $60 is important short-term support.

2.  AMD – Dan mentioned AMD in a CotD post last week, highlighting the active call volume last Thursday.  The stock rallied 3% on Tuesday to a 1 month high on decent volume.  The most active line was the Jul19th 4 puts, which were sold to close 50k at 0.17 in the morning.  AMD 30 day implied volatility remains near 5 year lows, in the low 30’s.

3.  CBS – Looks like a trader rolled 24,678 of the Jun21st 55 calls, selling them at 5.60 to close, vs. buying 37k of the Jun27th 60 calls for 2.22 to open.   CBS is still down 4% year-to-date even with the recent rally.  Next earnings is in early October.

4.  BEAV – Stock sold off nearly 5% on Tuesday after the company announced plans to split into two companies.  That plan was in contrast to activist pressure to auction off the company’s assets.  Despite the selloff, a trader rolled down a bullish bet, selling 12,820 of the Jul19th 100 calls at 0.60 to close, and buying 12,820 of the Jul19th 95 calls for 2.70 to open.  BEAV’s all-time high of $101.13 was reached on May 8th.  $90 is important technical support.

5.  QEP – A $5 billion market cap energy exploration and production company based in Denver.  Options rarely trade, but a three way traded – buying 10k of the Sept 25 puts for 0.25, selling 12k of the Sept 31 calls at 2.10, and selling 12k of the Jun21st 30 calls at 2.00.

6.  ARCP – Stock closed at a 1.5 year low, right near important $12 support.  Buyer of 80k of the Jan16 12.5 calls for 1.05 to open.  The Jan15 12.5 calls also traded over 20k at an average price of 0.55.  ARCP is a one of the few REITs that has struggled this spring.  The company offered shares at $12 in May and sold its shopping center portfolio to Blackstone for $2 billion to buy 500 Red Lobster locations.