Too Many Options: $YHOO, $HAL, $WFT, $PBR, $VALE, $BYD, $MGM

by Enis August 28, 2014 6:05 am • Commentary

Activity remains below normal as many traders have likely taken off ahead of Monday’s Labor Day holiday.  The energy sector was more active yesterday as XLE ran into resistance at its 50 day ma.

1.  YHOO – I wrote about the moves in YHOO implied volatility midday yesterday after FBN reported that Alibaba viewed Sept 23rd as the likely date for its IPO.  Calls were active again, with one large premium trade – buyer of 10,000 of the Jan2016 35 calls for 7.60 to open, that’s $7.6 million in premium, with a break-even of $42.60 in YHOO.  

2.  HAL – Halliburton has been a large cap leader in 2014, up 35% year-to-date.  There was a call buyer yesterday, with a trader paying 0.70 for 10,000 of the Sept 70 calls when the stock was $68.40 to open.  There was speculation yesterday that HAL might be a buyer of WFT, and HAL had its largest volume day since January.  

3.  WFT – Calls were very active (traded over 55k in total, vs. 1 month average of 3k) on the HAL for WFT speculation.  The Oct 27 calls traded over 20k at an average price of 0.19, and the Oct 26 calls traded over 12k at an average price of 0.43.  30 day implied volatility jumped from 24 to 28.  WFT is up 53% year-to-date.  The stock’s 5 year high is $28.11 from April 2011.

4.  PBR – PBR broke out to a new 52 week high above the $18 resistance level this week, moving 5% higher yesterday.  The Sept 17 calls traded over 20k and the Sept 18 and Sept 16 calls both traded over 10k.  PBR is up 40% year-to-date, and up 80% from its March low.

5.  VALE – VALE remains a major laggard even as the Brazilian market hits new highs.  The Jan15 11 puts traded 30k at 0.18 in the morning.  VALE’s 5 year low is $12.29 from March.

6.  BYD – The Jan16 8 put traded 11k at 0.95 in the morning.  BYD last traded below $8 in the spring of 2013.

7.  MGM – The Mar 22/18 put spread traded 11k for 0.68 in the morning.  Separately, the Jan16 17 puts traded 10k at 0.70 in the morning.  MGM closed right at its 200 day moving average, which it has not breached since December 2012.