Energy was the major sector that saw the most stock and options volume yesterday. Volatility picked up a bit, as VIX spot closed above 12 for the first time in a week. Calls were still more active than puts among single stocks, with the CBOE composite put/call ratio closing at 0.85.
1. XLE – Dan detailed the large put trade in XLE is yesterday’s CotD post:
When the Energy Select etf was $100.35 a trader bought 50,000 of the Sept 98 puts, paying 1.94 to open. This trade breaks-even at $96.06 on Sept expiration (down about 4.25% from current levels.)
XLE had matched XLU’s performance of +14% year-to-date prior to yesterday’s decline, and profit taking was evident in the high volume selloff. XLE’s breakout level to a new all-time high was above the $91.50 level in April.
2. USO – Oil prices remain near a 9 month high as tensions in Iraq continue. In that same CotD post, Dan laid out a volatility bet on USO:
The second trade that stuck out to me was a buyer of 10,000 USO Sept 39 straddles, paying 2.50 to open for the Oil etf. This trade breaks-even on Sept expiration if the etf is above $41.50 or below $36.50.
This trade does well if oil moves more than 7.5% over the next 3 months, which would be a relatively large move for the commodity considering the range of the past year.
3. KMI – The Jan15 42.5/47.5 call spread traded another 30k yesterday for around $0.415, with the buyer adding to the initial purchase of 40k for 0.25 from last week (see Wednesday’s CotD post). Implied volatility in KMI has neared its 2 year high in the mid-20s after these two large purchases.
4. COP – Looks like a trader rolling the Jul19 85 calls up to the Jul19 90 calls, locking in some gains. The Jul19 85 calls trade 21k at an average price of 1.45, and the Jul19 90 calls trade 27k at an average price of 0.19. COP has rallied nearly 40% from its February low to its June high, an incredible run for what is now a $100 billion market cap diversified energy company.
5. AMAT – Trader continues to roll the long Jan15 20 call position up to the Jan15 24 call position. The Jan15 20 calls traded around 17k at an average price of 3.86 to close, and the Jan15 24 calls traded around 30k at an average price of 1.64 to open. That roll was in similar size on Monday (in our TMO post).