Too Many Options: $EBAY, $FB, $PBR, $DOW, $GILD

by Enis September 3, 2014 6:25 am • Commentary

Volumes picked up a bit following the Labor Day holiday, though not by much.  The technology sector had the most activity in the options market.

1.  EBAY – Buyer of 22k of the Sept20th 53 puts for 0.60 to open in the afternoon.  That’s on top of a buyer of 7,700 of the Sept20th 52.5 puts for 0.41 earlier in the session.  Separately, buyer of 20k of the Oct 57.5 calls for 1.05 in the morning, possibly closing an overwrite.  The put buyers are likely adding protection against long EBAY stock ahead of the Sept 9th iPhone announcement from AAPL, which could lead to more details on the mobile payment platform that might compete with EBAY’s PayPal.

All of the options buying in the past week has led to a spike in EBAY 30 day implied volatility, though it will likely fall back to below 20 after next week’s AAPL event:

30 day implied volatility in EBAY, courtesy of Bloomberg
30 day implied volatility in EBAY, courtesy of Bloomberg


2.  FB – Facebook closed very close to a new all-time high, and call volumes were nearly 2x the 1 month average.  The weekly 77 calls traded over 30k at an average price of $0.325.  Outside of Sept expirations, the Jan15 80 call was the most active line, trading over 18k at an average price of $4.10.

3.  PBR – Petrobras continued its extraordinary run, clearing $20 resistance and reaching its highest level since November 2012.  The Jan15 19 calls were sold at 2.44, more than 40k times to close, with a trader taking profits of around a double on that position, which was initiated on August 19th.

4.  DOW – Buyer of 12k of the Jan15 57.5 calls for 1.10.  That line’s open interest has gone from around 8k to over 40k in the past 10 days.  DOW has remained below its July high of $54.28 in the past couple of weeks.

5.  GILD – Gilead is one of the best performing large cap stocks in the U.S. market in 2014, up 45% year-to-date, and now worth $165 billion in market cap.  The Oct 110 calls traded 10k for 5.05, and the Oct 110 puts traded 10k for 6.25, could be a straddle to open, or a conversion instead.  GILD 30 day implied volatility moved above 35 yesterday, near its pre-earnings level from mid-July.