Too Many Options: $DG, $HLF, $MSFT, $CSCO, $T, $CMCSA, $JD

by Enis July 22, 2014 6:14 am • Commentary

Stock volumes had their lightest day of the past week, as the S&P 500 index had another inside day.  A couple standouts (DG, HLF) in unusual options volume, along with tech and telecom names seeing activity.

1.  DG – Trader rolled down from the Nov 62.5 calls to the Nov 57.5 calls, paying 1.45 for the privilege, 60k times.  DG has sold off this month to within 5% of its 2014 low of $53, as FDO guided towards a poor quarter in early July.  DG does not report until early September.

2.  HLF – Stock traded to its lowest level since mid-April on over 10 million shares of volume.  CC detailed our views on our outstanding HLF put fly position in a COO post yesterday afternoon.  Options traded more than 10x the 1 month average volume.  The weekly 45 and 50 puts were the most active lines, trading around 19k and 11k respectively.  Ackman will be presenting this morning, starting at 9:15 am EDT.  The company’s earnings report is scheduled for July 28.

3.  MSFT – Calls traded nearly 3x the average 1 month volume.  We previewed the earnings report (today after the close).  The Aug16th 46 calls were the most active line, trading over 60k at an average price of 0.70 throughout the day.  $45.71 is the high from last week, and $42 is the first support on the downside.

4.  CSCO – CSCO has been unable to rally above the $26 resistance level in July.  However, call buyers were active, with the Sept 27 calls traded over 27k at an average price of 0.445.  Dan put on the following trade in CSCO in late June.

5.  T – The Aug16th 36 puts traded 50k for 0.45, and the Aug16th 35.50 puts traded 50k for 0.27, both around 1 pm EDT.  T reports earnings after the close on Wednesday.  The stock has been unable to move above the $37 resistance level over the past year, but is still up 2% year-to-date.

6.  CMCSA – The stock made a minor new all-time high on July 16, trading $55.53 intraday.  However, the stock’s failure in the past few days suggests a potential double top.  Nonetheless, there was a buyer of around 20k of the weekly 55 calls for 0.34 midday.  CMCSA reports earnings this morning at 7:00 am EDT.

7.  JD – Seller of 38,791 of the Aug16th 25 puts at 0.40 to open.  JD last traded below $25 in early June.  That is the largest options trade in the stock based on open interest.  The earnings report (the stock’s first) is expected in early August.