Too Many Options: $XLF, $ABC, $XOM, $SM, $ABX

by Enis August 5, 2014 6:00 am • Commentary

Light volumes in options and the broader stock market after two active days to end last week.

1.  XLF – Calls very active as there was a seller of over 30k of the Jan15 20 calls at an average price of 2.50 in the afternoon, and some of that premium was likely used to buy over 60k of the Jan15 23 calls for an average price of 0.60.  XLF’s high of the year is $23.07, while the $21.86 level is both the spot of the rising 200 day moving average and the unchanged mark for 2014 for XLF.

2.  ABC – Bizarre trade in AmerisourceBergen, the pharmaceutical services company. The Aug16th 75 calls (expiring in 9 trading days) traded 40k at 2.325 in the morning, looks like they were bought to open, possibly delta neutral (a 1.65 million share print went up after the close), though not clear.  ABC options rarely trade at all, much less 40k at a clip, and moreover, that was for a very short-dated option with no clear catalyst.  ABC hit a new all-time high last week after a strong earnings report, and is up 10% year-to-date.

3.  XOM – XOM hit a new all-time high last Tuesday before falling to a 3 month low on Thursday on a poorly received earnings report and the overall market’s weakness.  The stock is now down 1% after the sharp fall.  There was a buyer of 15k of the Sept 105 calls for 0.40 to open in the afternoon.  XOM’s high last week was $104.76.

4.  SM – Trader rolled down protection, selling 10k of the Aug16th 80 puts at 2.50 to buy 15k of the Sept 75 puts for 2.10.  SM has not traded below $75 since early June.  The stock is down 3% year-to-date, despite the broad outperformance of the energy sector.

5.  ABX – Three way trade in October expiration – the Oct 18 puts trade 10k at 0.98, the Oct 18 calls trade 12,500 for 0.97, and the Oct 19 calls trade 20k for 0.5775, all around 1:42 pm EDT.  ABX is up 2% year-to-date, and has traded in the $15 to $21.50 range for the past year.