Tight range of only 6 points in the S&P 500 index yesterday on relatively low volume. Single stock options activity was focused on calls once again, with many of the trades looking out 3-6 months.
1. DG – Trader sold 72k of the Aug 57.5 calls at 2.10 and bought 62k of the Nov 62.5 calls for 2.35, rolling the position up and out after Friday’s 7% decline in DG after the CEO’s resignation (and likely delay in the DG/FDO deal). Implied volatility declined over 2 points in August and rose over 1 point in November as options traders adjusted pricing to reflect the new potential timing of a deal.
2. MSFT – The Sept 44 calls traded over 50k on the session at an average price of 0.66, mostly buyers initiating. MSFT’s high so far this year was hit on Friday, at $42.29. That is the stock’s highest level since early 2000. MSFT reports earnings in late July.
3. CSCO – The Sept 27 calls traded over 50k on the session as well, at an average price of 0.20. Likely the same buyer as in the MSFT calls. CSCO last traded above $27 in the spring of 2010 (the high back then was $27.74). CSCO’s next earnings report is slated for mid-August. Dan’s new trade idea in CSCO is on the main page.
4. CCL – CCL was down 3% last week on a disappointing earnings report. Looks like a trader unwound the Jan15 39.5 / 41.5 1×2 call spread, selling the Jan15 39.50 call at 1.45 17k times vs. buying back the Jan15 41.5 call for 0.90 34k times. CCL’s high in 2014 is $41.89.
5. GLD – Gold hit its highest level since mid-April yesterday, and silver remains near 3 month highs as well. The Jun2015 135 calls traded 20k times for 4.05, looks like a buyer to open.