Too Many Options: $VIX, $KMI, $IMAX, $DHI, $TSLA

by Enis August 12, 2014 6:17 am • Commentary

CBOE composite equity put/call ratio fell to a 6 week low as calls were more active than puts on the session.  Here is the 1 year chart of that ratio:

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1.  VIX – VIX spot touched 14 for the first time since July 30th.  VIX implied volatility also saw a large decline, as 30 day implied vol fell to 77, from above 100 to start August.  The Nov 21 / 30 call spread traded 70k times at 0.76.  The Sept 25 calls were also active, trading over 65k at an average price of 0.32.  VIX spot has not moved above 23 in the past 2 years.

2.  KMI – Stock ended up 9%, and briefly touched a new all-time high in the morning, after news of its consolidation and change in corporate structure.  Calls were very active, with the Sept 40 call line trading over 30k at an average price of 0.95.  The Dec 40 calls traded around 20k at an average price of 1.47.  Implied volatility in farther dated options fell significantly as options traders lowered the probability of a big move from here over the next 3-6 months.

3.  IMAX – Buyer of 20k of the Dec 30 calls for 0.95 to open, vs. selling 20k of the Aug 26 calls at 1.10 to close, as a trader rolled the long call position up and out.  IMAX has not traded above $30 since December 2013.  The stock is down 9% year-to-date, and does not report earnings until late October.

Dan quickly detailed this trade last night on CNBC’s Fast Money:

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4.  DHI – Buyer of 15k of the Nov 23 calls for 0.68 to open, vs. selling 14k of the Sept 24 calls at 0.06 to close, another trader rolling a call position.  DHI sold off nearly 20% after a weak earnings report in late July, and the stock is now down 7% year-to-date.  The $20 level is important support, while $22 is first resistance.

5.  TSLA – TSLA rallied to within 2% of its all-time high of $265 from February.  The Deutsche Bank upgrade yesterday was very optimistic about battery costs in the long-term (a crucial issue for cost parity with traditional cars).  TSLA is now up 72% year-to-date.  The weekly 260 calls were the most active line, trading over 12k at an average price of 5.28.  TSLA 30 day implied volatility is still only around 38, near a 1 year low, even though the stock is nears a potential breakout to a new all-time high.