Too Many Options: $TWTR, $DD, $BKLN, $GRPN, $IBB, $EMC

by Enis July 30, 2014 6:22 am • Commentary

Options volume in the major macro ETFs was very light, as traders seem to have their positions set for today’s busy release calendar.  TWTR was the standout in single stock options.

1.  TWTR – Stock is trading up more than 25% in the pre-market after better than expected revenues and user growth.  The tailwind of the World Cup was quite helpful for the second quarter, and sustaining that momentum will be crucial in the coming quarters.  Options volume was around 4x the 1 month average yesterday.  The Aug16th 45 calls were the most active line, trading over 30k at an average price of $0.58.  The Aug16th 40 calls also traded over 20k times, at an average price of around $1.79.

2.  DD – Very aggressive buyer of the Sept 67.5 calls early in the morning after the open, which likely caused the early morning move of 2.5% to the upside.  DD closed the day up 1.35%, but implied volatility jumped 1.5 points.  The Sept 67.5 calls ended up trading a total of 36k at an average price of $0.736.  DD is up 2% year-to-date.

3.  BKLN – Rarely traded ETF that seeks the investment results that correspond to the S&P/LSTA U.S. Leverage Loan 100 Index.  Buyer yesterday of 65k of the Oct 24 puts for 0.15.  BKLN last traded below $24 in June 2012.  The average realized volatility over the past 2 years for BKLN is around 2.5, very, very low.

4.  GRPN – Buyer of 27k of the Aug16th 6.5 calls for 0.41 near the close.  GRPN reports earnings after the close on August 5th.  The stock is down 46% year-to-date, and the implied move for the earnings event is around 15%.

5.  IBB – Seller to close of 20,540 of the Aug16th 225 puts at 0.35.  The buyer originally paid around $1 for the puts on July 11th.  IBB realized volatility has picked up in July, with 10 day realized vol of 25 still above the 30 day implied vol level of 24.  IBB is up 12% year-to-date.

6.  EMC – The Jan15 30 calls traded over 25k at an average price of $1.39, mostly a buyer to open early in the session.  EMC’s 5 year high is exactly $30 from March 2012.  The stock is up 17% year-to-date.