Three of the tech leaders on Friday, FB, YHOO, and MSFT, were also the stocks with the most active options. The CBOE composite put/call ratio closed above 1 for the second time last week as traders still bought downside protection, mostly in ETFs.
1. FB – Second straight day that someone was rolling the Sept20th 70 calls up to the Nov 77.5 calls. Trader sold 17k of the Sept20th 70 calls at 7.35 to buy 18k of the Nov 77.5 calls for 4.80 just before the session’s close. In the morning, the Nov 77.5 calls were also bought for 4.10, 15k times. Facebook’s next earnings report is slated for late October, so Nov options capture the event.
2. YHOO – YHOO neared $40 for the first time since March, benefitting from the heightened anticipation of the Alibaba IPO expected later this month. Calls traded about 3x the 1 month average volume, led by a seller of 35k of the Jan15 46 calls at 1.33 midday. That trade is probably a call overwrite against a long stock position. YHOO’s 52 week high is $41.72 from January, and the stock’s 10 year high is $43.66 from early 2006.
3. MSFT – The stock hit a new 52 week high on Friday, and is now up nearly 23% year-to-date. Interestingly, puts were more active than calls in MSFT on Friday (compared to the 1 month average put/call ratio of 0.4), as there was a buyer of 20k of the Dec 44/40 put spread for around $0.835. $42 is the first major support for MSFT on the downside.
4. SLV – Silver has had a poor 2 month run, and SLV is now back near 1 year support around $18. The Jan16 19 call was the most active line, trading over 18k at an average price of $1.51, mostly seller initiated. The break-even on that trade is $20.51 in Jan16 expiration, implying limited upside in silver for the next 18 months.
5. EEM – A big roll in out of the money puts – trader sells 103,