Too Many Options: $PFE, $MSFT, $INTC, $APC, $WAG, $FOXA, $TWX, $ADSK

by Enis July 17, 2014 6:24 am • Commentary

Options market volumes were much higher on Wednesday, even as stock volumes were still relatively light.  Many large cap stocks saw large prints, included here:

1.  PFE – Trader rolled down a long Sept 32 call position, selling 120k of the Sept 32 calls at 0.19 to close to buy 120k of the Sept 31 calls for 0.46 to open, trading in the morning.  PFE started to rally shortly after that print, and closed above its 200 day ma for the first time since early may.  The stock is now up 1% year-to-date after yesterday’s 1.8% advance.  PFE reports earnings on July 29.

2.  MSFT – Options traded more than 5x the average daily volume over the past month, as MSFT touched its highest level since early 2000.  The Aug16th 45 calls were the most active line, trading 70k for 0.345 in the morning, buyer to open.  MSFT reports earnings after the close on July 22.

3.  INTC – Another mega cap tech stock that is trading at 10 year highs.  One trader took advantage of the strength to lock in gains on the Oct 33 calls, selling 40k at 1.48 in the morning.  We highlighted the initial entry in a mid-June TMO post:

A trader rolled up a winning bullish trade, selling 25,000 of the Oct 30 calls at 1.08 to close, and buying 75,000 of the Oct 33 calls for .27 to open.

The trader is still long a portion of the Oct 33 calls at a cost basis of 0.27.

4.  APC – Bizarre trade in the options.  Trader bought 20k of the Aug 100 calls for 11.00 and sold 20k of the Jul19th 105 calls at 5.05, both to open.  APC hit a new all-time high yesterday, and is now up 42% year-to-date.

5.  WAG – The Aug 72.5 calls traded 32k at 2.57 midday, likely to close based on open interest.  Walgreens is considering buying the balance of Alliance Boots and relocating to Switzerland in another tax inversion deal, though some uncertainty exists about whether legislation will be introduced to block tax inversions.  WAG is up 24% year-to-date.

6.  FOXA – Fox confirmed reports that it was interested in Time Warner.  Largest options trade was a risk reversal – trader bought 24k of the Jan16 40 calls for 2.09 vs. selling 24k of the Jan16 28 puts at 1.76, both to open.  FOXA sold off 6% yesterday from near its all-time high, and last traded below $28 in June 2013.

7.  TWX – TWX closed at its highest level since mid-2001, up 17% on the session.  The Aug 85 calls traded over 20k, and the Aug 90 and Aug 80 calls both traded over 10k.  30 day implied volatility jumped from around 22 to around 32 on the news.

8.  ADSK – Calls active for the second straight day, even as the stock has been relatively quiet (and earnings not until late August).  Buyer of 15k of the Jul19th 55 calls for 1.02 right after the open.  ADSK’s important technical levels are the 50 day ma on the downside, now around $53.35, and the all-time high of $58.68 from February.