Too Many Options: $VIX, $AAPL, $HTZ, $NGD, $RFMD, $LOW, $SE

by Enis August 20, 2014 6:29 am • Commentary

Another low volume day in the broader market, accompanied by light options volume outside of VIX, AAPL, and SPY options.

1.  VIX – Buyer of 145k of the Oct 16 calls paying 1.10 vs. selling 145k of the Jan15 20 calls at 1.37 midday.  That VIX diagonal call spread is expressing a view that a big move higher in VIX between now and January is likely to come before October expiration.  Oct VIX futures closed at 14.10, vs. 15.90 for Jan VIX futures.  August VIX expiration is today on the open.

2.  AAPL – AAPL barely failed to make a new all-time high, though it’s indicated in the pre-market this morning above the Sept 2012 high of $100.72.  Calls traded nearly 1 million on the session (vs. the 1 month average of 685k), and the weekly 100 calls were by far the most active line, trading over 100k at an average price of 0.735.  AAPL is up 25% year-to-date.

3.  HTZ – The Sept 28 puts traded over 14k at an average price of 0.51 on the session, mostly buyer to open in the morning.  The Sept 29 puts also traded over 5k on the day.  The stock is trading down more than 15% in the pre-market after Hertz withdrew 2014 guidance and said that it expects earnings to be “well below” the low end of the prior 2014 guidance.

4.  NGD – New Gold does not see much options activity, but there was a buyer of the Nov 6 calls to open yesterday, which traded around 30k at an average price of 0.80.  NGD has not traded above the break-even level of $6.80 since September 2013.

5.  RFMD – RFMD hit its highest level since 2002, and the stock is now up 133% year-to-date.  A trader rolled the Jan15 11 calls up to the Jan15 12 calls, selling the Jan15 11 calls 16k times at 1.75 to close, and buying the Jan15 12 calls 22k times for 1.25.  RFMD has not traded below the 50 day moving average (now around $10.40) since January.

6.  LOW – Stock neared an all-time high yesterday on the back of HD’s strong report, but failed to get above the November 2013 high of $52.08 ahead of this morning’s earnings report.  The Sept 50 calls were the most active line yesterday, trading nearly 20k at an average price of $2.34, mostly buyer initiated.  The stock is trading down 3% in the pre-market after lower full year guidance.

7.  SE – Spectra Energy is up 15% year-to-date, and an options trader put on a protection trade with an options collar.  Trader bought 15k of the Dec 37 puts for 0.55, and sold 15k of the Dec 42 calls at 0.65, both to open.